Venezuela's Inflation to Reach 1M Percent | Hacker News Reader

Venezuela's Inflation to Reach 1M Percent

bloomberg.com

129 pointsJumpCrisscross230 comments

HKS's Ricardo Hausmann, one of the leading scholars of Venezuela's economic history, lays out the case for military intervention by a coalition of the willing made up of allies from North America, Latin America, the Caribbean, and Europe:

D-Day Venezuela

https://panampost.com/editor/2018/01/02/d-day-venezuela/

I believe current US policy in South America misses a vital and timely opportunity. US policy should gear toward infrastructure projects throughout the Western Hemisphere. Akin to China's $2T Belt and Road Initiative throughout Central Asia and Africa. Just today Indian PM Modi and China's Xi Jinping are holding an historic joint visit to Rwanda, where they will announce new trade agreements.

Instead we see the same old strategy: sanctions in the hope of pro-democratic regime change, that only hurt the very people themselves.

After the massive success of Afghanistan and Iraq, I can’t see why anyone would oppose this proposal.

Not sure if this was sarcasm or not... please be sarcasm..

Your shields can't repel sarcasm of this magnitude.

That's a surprisingly bad idea, confirming the worst retoric of a dictator and pushing a country in full on civil war allegedly for saving it's people.

Lest we forget, Venezuela degraded to this pitiful situation after the democratic election of a populist who proceeded to redistribute the oil wealth to the poorest citizens. The disastrous policies were very welcomed by parts of the population, and they must be democratically rejected or rescoped to not kill the economy.

Venezuela does not function as a democracy. It hasn't for a while now.

Indeed, there's been widespread electoral abuses. But there is still a multiparty political system, there is still some opposition. Democratic principles can still work, for example public pressure can cut off political support of the leaders from their own party base, looking for self preservation. These sort of soft revolutions happened all over Eastern Europe, and even during the Arab Spring.

Basically, civil war is the absolute worst thing that can happen, so as long as there is still a chance the situation can solve itself peacefully, it should not be instigated from abroad.

I doubt there is much political appetite for this in the US/Europe. It would have to be led by neighboring Latin American states. And who would that be? Brazil? Their politicians are probably pretty happy to sit by and gloat and accept talented refugees.

I'd like to see Mexico lead the fray, people give Mexico a bad rep, if they led something like this and succeeded at 'saving' Venezuela it'd give them more cred. They should draft all the warlords and drug cartel members...hehe... "Bring your own guns".

Mexico’s historical foreign policy has been based on the principles of non-intervention, peaceful resolution of disputes and self-determination of all nations.

https://en.wikipedia.org/wiki/Estrada_Doctrine

As President Juárez said:"Among individuals, as among nations, respect for the rights of others is peace"

https://en.wikiquote.org/wiki/Benito_Juárez

Mexico’s new president AMLO thinks Juárez was the country’s best president, so I doubt we’ll see policy change in this admin.

In the past he has publicly refused to say that Castro or Chavez were dictators - doing so would interfere in Cuba or Venezuela’s right of self-determination.

BTW, his political opponents claim he will turn México into Venezuela.

Edit:spelling

We need not get involved. Regime change and policing the world isn't our responsibility. As bad as it is, we need our military to focus on us and our borders alone, we need to stop meddling in foreign affairs that don't affect us here at home.

> Regime change and policing the world isn't our responsibility

I find this to be a really odd statement as its been the USA strategy for almost 70 years.

Does this mean the general sentiment and overall strategy is changing at long last?

>>Does this mean the general sentiment and overall strategy is changing at long last?

Times change. 70 years back there were only 2 major powers. Europe was recovering from the world wars, although bulk of their human capital was intact, lets face it, Europe more or less lost the leadership of the world.

Also at the same time, many big geographical areas and ancient cultures got their freedom from European colonial powers.

So it was in US's interest to prevent new competition from coming up on all fronts- Military, Economy, Education, Human resources etc etc. So they had to keep everyone in check. This works as long you keep producing top notch human capital forever. You can't do that, as its quite literally impossible. Then when you lose things one bit at a time, you also have to face the grim reality that you are better off minding your own business.

Its not easy to stop the whole worlds progress, to preserve your own. At least not forever.

> we need to stop meddling in foreign affairs that don't affect us here at home.

Your argument was sound until this point.

Virtually every foreign affair in the world affects the United States.

---

For example, in 2017, 7% of all US oil imports came from Venezuela. [1]

In 2018, Venezuela is the #1 origin country of asylum applicants. [2]

Venezuela's plight certainly affects Americans. What action the US should take is another question.

[1] https://www.eia.gov/tools/faqs/faq.php?id=727&t=6

[2] https://www.dallasnews.com/news/immigration/2018/04/09/more-...

>>Instead we see the same old strategy: sanctions in the hope of pro-democratic regime change, that only hurt the very people themselves.

Not a US citizen, but the US foreign policy is a relic of the past. Its really like peak Henry Kissinger 'Our way, or the highway' attitude, where everybody is supposed to fall in line or face invasion.

China offers a far more novel and attractive option to let people live as they like, as long as they can have peaceful coexistence based on mutual interests.

Empires and super powers often fall into this trap of trying to do everything and bullying everyone into submission. It might work for a while while you are at your peak. The issue is its impossible to sustain this forever.

At this point 1M% or 200k% inflation is pretty much the same, the currency just stopped working completely.

Yes. This is purely academic at this point. The currency has collapsed.

I have felt very sad for the folks in Venezuela for a long time now. Here's hoping that there is a peaceful end to this nightmare for them.

I dont see how it can end peacefully as the government enforces more and more controls as the situation worsens, creating a negative feedback loop.

At the same time a starving population has probably very little motivation to revolt.

On the contrary, these people have nothing to lose - it's either death by starvation or death by a bullet.

There is still the option to escape on foot and this is what quite a few venezuelans are doing already.

> 1M% or 200k% inflation is pretty much the same

To the average person and in the short run, yes. More broadly, given Caracas' hard currency antics, it is a measure on the reallocation of assets from the broader economy to Maduro's cronies. (State products, e.g. food and petrol, are purchased with local currency. Cronies buy hard currency at a fixed price and resell it at the inflated price. This mechanism moves real wealth into their hands.)

Venezuela, one of the world’s oil rich nations got the back hand of the resource curse. It pains me to see how much their citizens suffer.

US and EU have their problems and aren’t perfect, but makes me appreciate how far we’ve come as a functional civilization.

So between the time you decide to go for coffee, and you get there (15 min), the price has gone up by 28.5%.

You understand the problem with hyperinflation perfectly.

Back in Germany in 1923, workers did their best to buy stuff for their earnings in the first hour. Anyone who held cash lost, and lost fast.

I was recently in Zimbabwe (yes, I was given a $100 trillion bank note) and everyone there told great stories about when you went into the store you would give the cash over straight away, because by the time you got back from picking out stuff off the shelves the money you had would be worthless.

It was fascinating to spend 6 weeks there and really understand what that kind of falling currency does it a place and it's people.

Honest questions: How do costumers and shopkeepers know the current value of the currency? Do they constantly check on phones/etc to figure out the price? And how do shopkeepers decide on the specific amount they will charge? Do they have a fixed price they want to sell in a more stable currency like USD and convert on the fly?

There's probably an app for that...

It never ceases to amaze me how people on the street simply know this stuff. Word gets around, rumors leak out.

I was told whenever the government printed a new bill, the street accepted it's value at $5USD (no matter what the numbers on the front said), and therefore everything that came before it went down appropriately. So let's say yesterday the biggest note was $1billion, and then today they print a $10billion note and release it - the street says it's $5USD, so your $1billion note is now worth only 1/10 of what it was yesterday, simply because a new one exists.

How long until they release a $20billion note? (or will it be $50billion?) nobody knows - except the corrupt govt officials who are profiting off the whole thing both ways.

I was told it was common to go to the Mozambique border and see guys exchanging notes that officially didn't even exist yet - the corruption ran so deep the govt. officials would release a $50billion note, but behind the scenes they were already printing and selling $100billion (and maybe even $200 billion) notes to friends and family and business associates to line their own pockets.

Then of course there were the times they would officially announce they were removing 3 (or 6) zeros from everything. So that $100 billion (100 000 000 000) note that was $5 USD is now officially only $100 000, but it's still supposedly worth $5 USD. Then next week they put out a $200 000 note, and what was worth $5 USD last week is now only worth $2.50USD, but it gives them a chance to get rid of a whole bunch of zeros, because, really, what good are a bunch of zeros anyway?

Yes, it really was that nuts. Utter insanity. I stayed with a family who took out a desk draw utterly stuffed with bills ranging from a few hundred million dollars up to the magical $100 trillion bill (the world's single largest bill ever printed). It's monopoly money now, and they even laughed about how it was back then too.

For my first weeks in the country I tried as hard as I could to wrap my head around the whole thing, and wondered endlessly how it all functioned. It felt like MASH or the book Catch 22 - so absurd it simply couldn't be real. But it was.

And while they now have "bond notes" which are supposedly locked to the $USD, I was able to sell mine on the street for ~30% more than face value, and even more if I dived into their digital currency - virtually all of zim runs on a digital currency now (called EcoCash) - I suspect it has one of the highest uptakes of digital currency on the planet because everything else is dysfunctional.

These days there really is an app for that (in reply to lower comment)

Wow. I've never read a first-hand experience of someone in the thick of it. Incredible, thanks for sharing.

Did you consider the exponential behaviour? I get that 15 minutes makes for prices going up by a factor of 1.00026271523, so an increase by 0.026%.

Calculation: https://www.google.com/search?q=exp((15+min)*ln(10000%2B1)%2...)

How currencies collapse:

1. In debt pumped economies (the majority of world countries these days,) the value of major assets and debt put into them exceeds the money in circulation big time.

2. People pop their piggy banks, sell cars, flats, company stocks just to get some food. Price of these very major assets plunge, and the holders of tbils, bonds, and etc (rich people) begin to panic.

3. When even rich people's money can't buy food and basic necessities, many of them run away from the country with what things they have left, pushing currency further down.

4. Whomever is left in the country is left with a lot of paper, and no food.

It makes me angry to see how such rampant government ineptness can completely destroy a once-thriving economy in a decade. Worse still is Maduro’s continued insistence that it’s a conspiracy against Venezuela rather than idiotic policy which is to blame.

Pretty much every socialist-communist-attempting country went through this. China is the only kind-of successful one, but at the cost of rivers of blood, political prisoners. It's Venezuela's turn to show the whole world how socialism fails.

> China is the only kind-of successful one, but at the cost of rivers of blood, political prisoners.

china actually "secretly" (or openly secretly) adopted capitalist ideals for it's planned economy (such as opening up foreign investments and exports of cheap labour) - see https://en.wikipedia.org/wiki/Deng_Xiaoping (and slightly better article https://en.wikipedia.org/wiki/Socialism_with_Chinese_charact...). These reforms have single-handedly made china the world's 2nd biggest, economy after the US.

Venezuela doesn't have the same level of labour exporting, and relied on natural resources, and even actively nationalized private businesses (against the interests of foreign investors). Obviously they are going to stop getting investment, and as oil prices tanked, their socialist policies (or, bribery of the voters with "free" stuff) can't be kept up.

Actually, it was Zhao Ziyang’s credit.

https://en.wikipedia.org/wiki/Zhao_Ziyang

Please do not mix communist with socialist. Communist is a political party like the Republicans and Democrats parties we have here in the US.

China has moved away from the socialist economic models for 4 decades. They thrive because they have capitalist/capitalism model.

Lets end this meme right here. Venuezela was and is a capitalist country. It may have had some left wing tendancies in government, but no more than say, denmark or sweden. Two countries which would rather disprove your point.

EDIT: It's incredible how many people seem to read this and assume that I somehow support the venuezelan government. Just because they have poor policy does not mean that they are communist.

Venezuela has a totalitarian government who nationalized industries and implemented heavy price controls, putting those who don’t comply in jail (or to death by government militia).

I can’t imagine how this could even be compared to market economies such as Denmark or Sweden.

It nationalized oil - just like norway :)

As for price controls, this happens all the time in countries in the west, ranging from farming subsidies to taxes on sugary foods. Another example where this often happens is minimum price controls per unit of alcohol

Yes the government hasn't been great at human rights, but that doesn't make it socialist.

It’s nothing like Norway, no matter how many smiley faces you put over the citizens killed by the Venezuelan government.

Price controls are a socialist measure. Name a country that has impelemented Venezuela-style price control, where business owners either sell at government-defined prices of face imprisonment, and you’ll spot a socialist leader doing it “for the people”.

The UK. You cannot sell alchohol too cheaply. We have price controls per unit. There are literally thousands of such controls in most contries.

California. They control the price of electricity in the state.

And yes, these are laws. If you break them, you go to prison.

Are you being purposefully dense? I’m not talking about isolated price controls in a few products. I’m talking about generalized price controls that cause shortages and hunger. I’m talking about going to jail for trying to sell food above the price you bought it from a producer.

Do you honestly believe Norway, the UK and California are anything like that?

But I am objecting to the idea that doing these things makes a country communist. I will refer again to the generalised food price controls during wartime in the USA and beyond - were these countries communist at that time?

For another example of a country that has wide-ranging price controls on basic foodstuffs, look to the 2008 situation in mexico.

No, price controls are always counterproductive, but they don’t automatically make a country communist. I never said they did. In fact I never used the word communist in this discussion until now.

Venezuela is socialist because it combines destructive economic measures with collectivist ideology, takeover of institutions like the Supreme Court by Party supporters, violent government-backed militias, fraudulent elections, cult of personality, etc.

In summary, all the usual traits of a totalitarian left wing government.

Every single one of the things that you just listed are present in a many parts of the developing world. Most of these places are not considered communist.

In fact I would say those things you said perfectly describe a country that is a Dictatorship - but there are lots of those that are not socialist.

I assumed that you thought they were communist because you disagreed with my original post which claimed that they were not.

The term “dictatorship of the proletariat” is not a coincidence.

You seem to be making the argument that all dictatorships are communist. I can assure you this is not true, and would be surprised if you cannot think of any examples of non-communist dictators.

I'm making the argument in the opposite direction. Communism and socialism end up as dictatorships, when not already bootstrapped as one.

> Venezuela is socialist because it combines destructive economic measures with collectivist ideology, takeover of institutions like the Supreme Court by Party supporters, violent government-backed militias, fraudulent elections, cult of personality, etc.

Except for the phrase “collectivist ideology”, none of that has anything to do with socialism at all.

In theory? Maybe. In the real world those traits have been present every time.

Those things are also present in lots of places that are not at all communist.

Correlation does not imply causation. It also doesn't mean they are literally the same thing.

Consider zimbabwe or libya or syria - they all have these things and I don't imagine you consider them all communist.

Well, Mugabe was a Marxist. Gaddafi's government was the "Great Socialist People's Libyan Arab Jamahiriya". I don't know if Assad has any ideology, but his party is the Arab Socialist Ba'ath Party, and he has been supported by Venezuelan and Nicaraguan dictators, Algeria's National Liberation Front, South Africa's ANC, etc.

> In the real world those traits have been present every time.

No, they haven't. There's a whole lot of places that have had socialism will without any of them (and lots of non-socialist regimes with all of them.)

There’s a difference between min price control and max price control.

That's why I gave two examples. One with a min control and one of a max price control.

FDR during WW2? What about the USA during the 70s, by that famous socialist named Nixon.

In America, the general view seems to be that any move from politicians to move towards economies like Denmark and Sweden are "socialist". Therefore they conflated to have no difference between Denmark and Venezuela and the USSR.

It's an extention of the absolutism in politics that has grown more and more, especially I think since 2008.

I'm not sure why you were downvoted, this isn't entirely incorrect per se.

In political dialog, too often "socialism" and "communism" are equated together in this country incorrectly. Venezuela and Sweden usually aren't directly compared together, but what happens is that failed authoritarian central-planned nations like Venezuela are often used as boogeymen against "socialism" in general, including socialist policies (like, say, a universal healthcare -- which is not socialist per se, but has some elements if there is large central planning) that have nothing to do with why Venezuela failed, and are implemented with some decent success in other countries.

Heck our own current president even used Venezuela as a boogeyman against "socialism" in general fairly recently. (https://www.newsweek.com/trump-was-laughed-world-leaders-dis...)

The government has routinely nationalized both foreign and domestic businesses and expensive infrastructure, and sets prices on goods. When this caused inflation and shortages they responded by nationalizing more businesses and setting more prices, and trying to enforce a false exchange rate. I'm not going to bother explaining how this is self defeating since everywhere this has been tried the same things happen, and if you can't figure it out it's because you don't want to.

There are plenty of places where buisnesses have been nationalised, from many arab states and norway's state-owned oil buisnesses to nationalised rail, post, and other services in many western countries.

I don't dispute that the country has been run badly but calling states that do these things communist makes almost every state communist.

There's nationalized in the sense of, only the government can control this resource, it is owned by the people. Good. Then the government builds it and spends money on it. If you have a good government you get a good resource for the people. If you have a bad government you get a mess.

The nationalization referred to in Venezuela, is someone invests their own resources in building something, legally with the approval of the government. After they have built it, the government comes with people with guns, and says, "this belongs to us now" and either the owners go away, or go to jail, or get shot. Is that what they do in Norway? Do you think smart, capable people with access to capital want to work in Venezuela? Or maybe all those people left and provide their services to other countries.

And by the way, this Venezuelan kind of nationalization sounds too me like the kind that Marx was advocating, it's real socialism too.

You are making strawman attacks against me. Nowhere did I claim that the situation isn't bad in Venuezala, or that I support the government. I am simply saying that calling it socialist for the actions it has taken is extremely similar to what western countries have done and continue to do.

For examples of already-existing companies being nationalised, see RBS in the UK, or Cardiff Airport in wales. After the 9/11 attacks in the US, all airport security firms were forcibly nationalised.

If you are claiming that the definition of socialist requires it to be done with guns instead of money, I don't know what to say. However be aware that if somebody did create an oil company in norway against the law then I imagine that some nice people from the government would have to come and ask them not to. If they refused despite that - they may actually have to make use of the state monopoly of violence.

Right, but to your original point. You said Venezuela is a capitalist country. Is Norway socialist because they used capital to acquire assets, and Venezuela capitalist because they used force to acquire assets?

I don't think most people here have a problem with a democratic country with socialist leanings, which maintain a largely market economy. People have a problem with populist leaders who promise to enrich the poor by forcefully taking the means of production away from "capitalist pigs" and using the wealthy and the West as a scapegoat for all their problems. No one complains about Sweden and Norway, but the propaganda that goes around in Latin America is the more violent kind. And I don't see how that doesn't fall under the umbrella of socialism.

It's very wrong from bufferoverflow's viewpoint.

From my viewpoint (I'm Norwegian), Venezuela doesn't look leftist at all. Chavez and Maduro look like just regular dimwit autocrats, they don't look like Einar Gerhardsen, Tage Erlander, Olof Palme or Poul Nyrup Rasmussen at all. Chavez/Maduro look more like those horribles the US tends to prop up around Latin America, except that their veneer of rhetoric uses unusual vocabulary.

Maduro is the kind of leftist who'll rather repay PVDSA debts than feed the poor.

But from bufferoverflow's viewpoint it's different. Maduro uses leftist vocabulary and fucks up, therefore.

> Chavez and Maduro are not leftist.

Are you serious? Do you know anything about the beloved "Bolivarian Revolution" and its policies?

I do, yes.

South America had had a lot of regimes that handed out state funds to this group and that. The Bolivarian Revolution has that. But to which group? From what I've read Mission Habitat housing has gone mostly to Chavez/Maduro voters, for example. Friends of the local party functionaries.

I suppose you might say that's still better than letting the rich and corrupt help themselves to public resources.

Venezuela has blacklisted people for a long time who belong to any opposition political party from holding jobs (and not just government ones). The brain drain they have experienced is insane. That's not really like Denmark or Sweden at all.

Indeed. But that fact alone makes them a terrible government, but not communist or socialist.

The Brazilian right wing government put in jail the candidate that is in the top of voting intentions for president. Brazil is a real dictatorship, Venezuela isn't, as their "political" prisoners were responsible for more than a hundred of deaths.

Can you please support all your claims with sources? I'm Brazilian and what you said is absolutely nonsense.

"(...) a Brazilian appeals court sentenced the former president to 12 years in prison for corruption – a polarizing and controversial verdict Lula supporters see as a politically motivated attempt to derail his campaign."

http://theconversation.com/brazilian-candidate-still-crushin...

A court of law sentencing someone after years of proper judgment procedures is very different from a dictatorship jailing an opposition candidate.

With the exception that there is no proof of the alleged crime and he is in jail before his recourse was judged, in another case his Habeas Corpus was accepted by a judge and illegally not executed by government workers. Also, he is illegally under solitary confinement and frequently, the Justice doesn't let even his lawyers have access to him. A true blue political prisoner.

Of course he has access to his lawyers. See this source in Portuguese https://www.cartacapital.com.br/politica/haddad-passa-a-ser-... The former São Paulo mayor, who is also a lawyer and form the same party as Lula, will have access to Lula (now his client) any day of the week.

> Brazil is a real dictatorship, Venezuela isn't

What's your evidence for this outrageous claim?

Venezuela has a legitimate elected president, Brazil ousted a honest one and put a corrupt in the seat through a coup d'etat. Not coincidentally, he is selling with a big discount all national companies and resources, what Maduro and Venezuela will never do.

> Venezuela has a legitimate elected president

You mean an illegitimate president: https://en.wikipedia.org/wiki/Venezuelan_presidential_electi....

> Brazil ousted a honest one

You mean a corrupt one: https://en.wikipedia.org/wiki/Impeachment_of_Dilma_Rousseff#....

> through a coup d'etat

Through impeachment by a supermajority of the lower house and the upper house: https://en.wikipedia.org/wiki/Impeachment_of_Dilma_Rousseff#....

> what Maduro and Venezuela will never do

Yeah, he's too busy expropriating what's left of Venezuela's wealth for himself.

> as their "political" prisoners were responsible for more than a hundred of deaths

Where the fuck are you getting this from? Stop pulling lies out of your ass.

Personal attacks are a bannable offense on HN. So is using the site primarily for political battle. You've done these things so many times already—and so egregiously—that we've banned this account.

If you don't want to be banned, you're welcome to email hn@ycombinator.com and give us reason to believe that you'll follow the rules in the future. The rules are at https://news.ycombinator.com/newsguidelines.html.

> " had some left wing tendancies in government, but no more than say, denmark or sweden"

Thanks for making my day, that's the funniest thing I read today.

It would have been funnier if it weren't for the hundreds of thousands of Venezuelan's fleeing the country to neighboring countries. And people needing to smuggle toilet paper. And inflation with more than 4 digits

I do not disagree; The situation is bad and a result of poor policy from the government

However, the definition of communist is not 'a poorly run country'.

They self-classify themselves as left-wing.

https://en.wikipedia.org/wiki/Hugo_Ch%C3%A1vez#Bolivarianism

They have also imposed several left-wing actions, like nationalization of oil companies (and your comparison is with Norway is again without merit as Chavez nationalized several industries - including oil - without significant compensation and put his incompetent cronies to run it, which means they don't produce as much as when they were privately run)

I imagine most people in Europe would consider their political position as left of the US. That doesn't make them communist.

So the argument that you are trying to make is that a state is communist when it nationalises industries (not only one industry) and those industries are not: Oil (Norway, Saudi arabia, UK) Aerospace (Canada, UK) Cement (Pakistan) Food (Zimbabwe, Croatia) Mining (Sweden)

The only company Venezuela has nationalized that does not fit one of these criteria is a glass producing company. To be honest if I looked hard enough, I could probably find an example of such an action in another country.

Isn't a 'capitalist country' one where the owners of capital compete in the marketplace to provide goods and services?

Maybe Denmark and Sweden have high taxes and price controls on a small percentage of goods, but the degree to which capital can freely compete is still far greater than in Venezuela.

For the most part, you are free to start companies and sell goods and services in Venuezala. There are exceptions to this, some of them ill-thought out, but none which cannot be also found in much of the west.

Make a list of such countries, why don't you.

And please restrict yourself to cases where the hyperinflation started after the regime in question took over. China's hyperinflation happened about a thousand years before Communist Party too over, the Soviet Union's started during the civil war and ended soon after the Communists won (1923-1924).

LOL. I grew up in USSR, and you are 100% wrong.

Since 1922 ruble lost its denomination 6 times. The total loss of valuation is 1 to 5 quadrillion.

That's not even counting the inflation since 1998, which is is another 1:5 loss, though that's not due to socialism.

https://ru.wikipedia.org/wiki/Деноминация_(экономика)#В_СССР...

(EDIT: fixed the typo 1992 -> 1922)

What was the inflation rate from 192x to 1989?

I mean, the inflation was terrible from 1917 to 1924. Clear hyperinflation. But it's not fair to blame the communists for that. Starting around 1922 it's fair to blame them for much of it, because by that time the Communists were in almost full control. But that's roughly when the hyperinflation ended.

Before collapsing, Yugoslavia has a huge inflation.

Yes. It's listed as one of the 15 examples in Wikipedia, actually. Bufferoverflow appears to think that most/all leftist regimes led to hyperinflatiuon, a viewpoint which is not well backed by Wikipedia's list.

You hear what you want to hear. I never said "leftist". I said socialism-communism-attempting. Denmark/Norway/Sweden are leftist, but not socialist, for example, they are all capitalist countries with decent social safety nets built in.

If you look at the list of countries that tried to build socialism/communism, most of them went through hyperinflation, and all (as far as I know) destroyed their economy. With the exception of China, which isn't 100% socialist yet (as in, the means of production 100% controlled by the government). No country ever achieved communism.

Btw, Cuba is slowly starting to move away from socialism:

https://www.nytimes.com/2018/07/22/world/americas/cuba-const...

I interpreted that as socialist, communist or attempting something like that. And because of the fuzziness I asked you for a list.

Like Argentina (mobilizing it's own army against it's own people to enforce IMF reforms right now) is a showcase about why market driven capitalist governments with "trickle down economics" delusions are a failure?

Both Chavez and Maduro still receive praise from the far left opposition leader in the UK - while the government are pretty damn incompetent too, so the opposition actually has a chance of getting into power.

https://twitter.com/jeremycorbyn/status/309065744954580992

> rampant government ineptness

The fascinating thing to me is how stability has been maintained. Usually nations have two stable modes. Ones where the peasants are too hungry and illiterate to organize. And ones where enough people are productive and happy to make revolting a bad bet.

Venezuelans are educated. Yet they've devolved to failed statehood without much fuss from the population.

Depends on how you define "much": https://en.m.wikipedia.org/wiki/Timeline_of_the_2018_Venezue....

More than half of the country support the government and their current struggle. Venezuelans are educated, and a lot of them knows were they stand in the world. Most of them don't have time nor interest to be in the internet fighting "meme wars".

I've lived in Colombia and Chile, close to 4 years between the two countries. I left Chile at the end of December. Venezuelan economic refugees are all over the place. In both countries.

I've worked with, hired, been friends with, been driven by (etc), dozens of Venezuelans and they always talk about this subject.

What the above commenter is saying is totally false. I think most YCers could see quite easily through this and realise that this is a government troll but in case you're wondering, this is your confirmation.

More often than not, Europeans flood Brazil with immigrants. It happened in 1800, in the end of 1800 and beginning of 1900, again around 1930, and yet again around 1950-1960. After the crash of 2008, Brazil was thriving and again, the influx of Europeans moving here grew, specially Portuguese and Spanish running from their collapsed economy.

Of course there are Venezuelans trying to find a better life, the same way every Brazilian is leaving or thinking about leave the country. Why would Venezuela be different? I'm not a government troll, but aren't you?

How can you compare the current Venezuelan and Brazilian emigration? Around 10% of Venezuela has left to other countries since 1996.

> the government and their current struggle

That's a funny euphemism for "ruinously managed totalitarian hellhole".

> More than half of the country support the government

Please provide a credible source for this claim.

Hasn't there been a massive brain drain? The view from afar is that the political opposition is inept. Those who could get out, have.

I'll do my best to relate what my wife tells me and you guys can dissect from there.

The situation for the populism send simple. I've listened and asked many questions and from what I've heard from her parents as well is this:

1. Chavez gained power as a populist movement for to the fact that whole the poor may get medical services and basic education they didn't appear to have any chance to participate in further education. This kept them poor. Born poor and then you stay poor. 2. Second big thing is that labour made very little money. If you were lucky enough to get a job in the oil industry maybe you could get enough to lead your family out of poverty, but even then it's only marginally possible.

Noteworthy definition of poor here is like shanty town type poor. Not like Canada type poor where your kids have 100% the same access to university as the rich kids.

This set the stage for the populism. Apparently her father used to drive his employees during voting day and encourage them to vote. So he'd hear what they were thinking and so on along the way. Chavez was definitely their guy, but in the beginning even middle class people were divided about whether he would be bad due their concerns about corruption. I guess the hope was that he'd remove it decrease corruption and that would be a win for everyone.

Where we are today is actually very much different than what any geopolitical conspiracy theorist boosting for the US client state story would have wanted. Currently China is taking control over the country, they are treating it more and more like a client state. It's basically criminal what's happening with oil for money deals being agreed that undervalue the oil immensely. China then imports their workers to work on the extraction of the oil further decreasing the value to the country. It's a horrific downward cycle that is putting them into China's hands not the US, so if the US were to have been involved then it's really backfired on them.

Where are we today on the ground? 1. Imagine waiting all day to walk into a grocery store and find you can't get tooth paste it the only thing you can buy for breakfast is fruit loops? On Instagram there are hundreds of photos of nearly empty grocery stores. These are not exaggerations. We get those pictures from her family directly.

2. ALL (and it's just about meant literally) educated people under the age of 40 have left. I'd say better that 50% of those in their 40-50s are also gone now or trying desperately to leave. This has compounded problems further because universities don't have the staff to train the next generation. They don't have engineers to run or manage the industry. They don't have entrepreneurs or businessmen to run basic stuff from cafes to car dealerships.

3. Medicine is so scarce she has lost already one family member due to a medical condition that was treatable. I don't recall (honestly) what it was but I'm not going to ask her to tell me for HN. Right now she has one Uncle struggling with a minor heart condition, but he can't get the medicine that would allow him to live happily and heathy in a country life Canada. Another Aunt is going to lose a chunk of her foot; the debate currently is how much they will amputate. I shit you not. This is also due to the fact that her diabetes is unmanageable without medicine.

What's happening today in Venezuela Is probably one of the worst ongoing humanitarian crisis's in the world today. It was self-inflicted initially, but now people are dying daily for no good reason, dogs and babies are being left in the street to die and diseases that shouldn't be tolerated are coming back. I won't mention the one she said she heard, because I don't want to be a fear monger without facts, but the shit is crazy.

It's too the point where we (Western societies) should do what we do when things get too crazy and with the support of Latin America we need to bring in relief with a plan together with region partners in how to reconstitute the nation. Anything less is basically uncivilized at this point IMO.

Makes me really sad to hear this. How a few humans can really fuck it up for everyone.

Long way to go before we become a truly intelligent and civilized planet than can absorb crisises like this without any problems. we need to have excellent resource allocation programs and policies that work for everyone. This is a really really hard problem to solve.

The earth has enough to satisfy thirst, hunger, put a roof, have enough energy/electricity etc for everyone. We just haven’t been able to crack the problem of maximizing basic happiness.

Perhaps this is a fundamental human flaw? I don’t know. I think about this all the time.

People chose populism in 1999. This is the end of this path.

Populism has the message that the elites are corrupt and we can solve issues by just selecting the right people to lead us.

Populism assumes that there is a such thing as "will of the people" and the job of the government is to simply implement this will.

Why conflate this with populism? This is the result of poor economic policies.

It was the root cause.

Populism and good economic policies repel each other.

Because your basic asumption is, that people are stupid?

Yes, especially popular things and popular people. If it’s popular, it’s stupid.

People have incorrect intuitions of how the government and democracy works. They respond positively to solutions that are overly simplified.

They see person problems instead of system problems. They want to solve issues one by one instead of using general principles.

I actually do agree. But does this not conflict with our current concept of democracy in general?

Because democracy is supposed to implement the will of the people .. so populism?

But I don't think we should abandom democracy, but maybe make the system simpler, smaller - easier for people to understand. So more power back to the local communitys, instead of up and zentralized.

Well... people are stupid. Rather we are overly simplistic creatures that are set up to fail. My observations are:

A) nobody is able to discern whether or not something is true without an astronomical amount of effort and resources therefore we resort to deeply flawed heuristics

B) We are not rational creatures. Logic is mostly wasted on us. All decisions are ultimately emotional and often it's made by unconsciously substituting an easier question and deciding based off your answer to that.

C) Incentives are extremely powerful motivators. They can cause us to do bad, nasty things to get a reward.

D) A person sufficiently motivated by the incentives of being the sole person in control of all the resources can and will routinely use the flaws in our psychology against us to their advantage.

Humans basically don't stand a chance. The fact that England and the US happened is freaking miracle. Interestingly in all cases where they system of humanity converged on a democracy was when there was a broad coalition of people with different interests who would all benefit from opposing the ruler. The scary thing is that it can all go back the other way. Even the US can collapse and fall into this kind of nightmare. I think from 2000 to 2015 was the golden era of humanity and we are now on a slow and steady descent into madness.

> Why conflate this with populism? This is the result of poor economic policies.

The poor policies resulted from first an elite ignoring the poor and then the poor deciding they wanted majority rule. Majority rule devolved into anti-intellectualism and reduced respect for property rights, which in turn led to falling production. Populism isn't the root cause, but it's damn close.

(This story rhymes with the fall of the Roman Republic.)

Is it populism or disrespect for property rights? What company would make a major investment after nationalization of industry? It seems you could be 'populist' by promoting education and investments to bring up the poor without destroying a country.

Because there are a lot of self deluded folks here who would enact similar economic policies except they would be under the guise of socialism and basic income.

"Poor economic policies"

You're taking about someone who claims Hugo Chavez appeared to him as a "little bird". Really https://www.huffingtonpost.com/2013/04/03/nicolas-maduro-hug...

poor in the sense they don't work well for Venezuelans. They work well for Maduro. Sure, that's a fairly lopsided system, but that's what he has built. A country where he is the king and they are his subjects.

I would rephrase: populism assumes there is a will of the people and implementing that automatically makes everything work fine, without need for compromise with other players or reality at large.

Basically yes.

Will of the people don't exist as starting point. It is the end result of complex democratic process and interaction with democratic institutions.

The proper end result is not what any interest group wants but hopefully a negotiated result that represents a deal that most people can accept. We should try to improve this process, not to make it streamlined and as short as possible.

I'm far away from south america - whenever an article comes about Venezuela, I just read useless repetitive statements like most of the comments on this HN submission.

Any insightful local Venezuelans for any comments except template-based mundane political statements?

What's the reverse of populism in the case of Venezuela? Going easy and decreasing tensions with US and allies and reverting sanctions and attracting foreign investments, like some other south American countries? Or what? any insights?

You can go Argentina/Brazil way:

- pay all of the alleged debts without discuss

- accept US military and political counselors

- Allow an alien actor to open multiple military bases in your country

- Stop exporting and start importing everything you can from America

Populism in Venezuela followed the familiar path.

Typical populist belief is that popular sovereignty is expressed in elections and with grand referendums. At the same time they wall over other institutions needed for liberal democracy. They also work to delegitimize their opponents and make them enemies. As a result, they pack all other institutions with loyalists.

What they should have done, is to acknowledge that supporters of the old system are also Venezuelans. They must be incorporated in the system relative to their support. They should have enacted laws and improved legals system that is independent no matter who is in charge and harder to corrupt.

Most of the awful things that have happened to Venezuela came about as a result of the resource curse. Countries with rich natural wealth that overpowers the rest of the economy that is contested alwaya go to shit, whether in the Middle East or Africa or Latin America.

The whole "populism" / "socialists" thing is the American media projecting its fury at US oil companies getting kicked out in the 90s. There were many things they did to economically mismanage the country but that wasn't one of them and neither was building hospitals, schools and housing with wealth wrested from economic elites and American oil companies.

The best thing that could happen to them would be for oil to lose its geopolitical importance. Then the rest of the economy could rexover and the proxy fighting between can end and the Dutch disease can end.

Meanwhile, they probably will put the opposition in power next election, which American media will approve of, but it won't make things any better.

Populism assumes that there is a such thing as "will of the people" and the job of the government is to simply implement this will

So basically Switzerland is doomed is what you're saying

That's why they have imported 30% of their citizen from other countries, choosing among the best in their fields or the wealthiest.

I’m not sure his policy is “idiotic” in the sense that he just made mistakes running the country. This is history repeating itself for the nth time, so it can’t be a “mistake”.

This is in fact socialism working as designed. Maduro and the rest of his political bureaucracy elite are doing very well, than you, at the cost of the rest of the country.

> Worse still is Maduro’s continued insistence that it’s a conspiracy against Venezuela

Coincidence or not, Venezuela is sitting in the world's biggest oil reserves. And there are really some foreign companies trying to get it for free (the same they are doing without effort in Brazil and Argentina, which will open 3 US military bases now that the president is "aligned" with the US).

Yet things got a lot worse after Chavez's continued nationalization of industries, kicking out those foreign companies and replacing workers with Chavistas.

Who are Chavistas? An ethnic or religious group in the country or are they ordinary citizens who voted for the government?

I believe it's a reference to people who are strong supporters of Chavez or the ideology[0].

So not necessarily ethnic or religious -- but political.

[0] https://en.wikipedia.org/wiki/Chavismo

Identical story to Zimbabwe.

It's not ineptness. It never was, never is and never has been. It's deliberate. This is a textbook example of how power has been weilded throughout history. Your angry because you assume the goal should be to make everyones lives better. Maduro's goal is to make his life better and to keep the ability to do so for as long as he can. To that end his policies have been effective. The consequences have been horrific for the people, but he doesn't give a fuck. He's only in it for himself.

Why Nations Fail was such a good damn document of history and the nature of human behavior.

Your comment reminds me of Rules for Rulers by CGP Grey. Great video and relevant to this discussion:

https://www.youtube.com/watch?v=rStL7niR7gs

If you like that video Why Nations Fail is basically 100x deeper explanation through examples of the last 12,000 years of history.

Are you referring to:

* James Robinson's 18m TED Talk [1]

* Daron Acemoglu's 90m lecture [2]

* Daron and James's 550 page book [3]

[1] https://www.youtube.com/watch?v=jsZDlBU36n0

[2] https://www.youtube.com/watch?v=IRAkz13cpsk

[3] https://smile.amazon.com/Why-Nations-Fail-Origins-Prosperity...

> To that end his policies have been effective.

How?

A complete lack of reference to the elephant in the room. Chavez was always very clear on his approach, and his 100% embracing of the S-word. Yet not referenced at all here.

And several major S-leaning populist candidates in the West openly supported Venezuela until very recently.

Still much lower than in Hungary after WW2, 41.9 quadrillion percent.

"When the pengő was replaced in August 1946 by the forint, the total value of all Hungarian banknotes in circulation amounted to 1/1,000 of one US dollar"

All notes, in the whole country, were worth 1/10th of a cent.

Which of course means it is not literally true, beause the paper those notes are written on is worth a lot more.

How do people deal with this in real life? I mean, is there a way to safeguard savings in such a scenario, or have enough money for day to day purchases like food ?

Safeguard? Only if you have something like Gold or something to barter with.

Purchases? You need to barter.

i'm curious how common crypto I over there

Maduro launched a crypto currency called petro.

https://www.theguardian.com/world/2018/feb/19/venezuelas-new...

https://www.reuters.com/article/us-crypto-currencies-venezue...

Maduro's government launched its own cryptocurrency supposedly backed by Venezuela's oil reserves. Google: "petro" if you want to have a good laugh.

Some interesting responses from yesterday: https://www.reddit.com/r/vzla/comments/911mu4/do_venezuelans...

They use dollars.

You can only get so many officially though, and it's hard, so the black market is huge but the rates are very high.

Some people earn in dollars, I've spoken to a doctor for example, who now works making machine learning training data on several platforms just to earn in dollars (like tagging images, etc. like MechanicalTurk).

It's such a waste of potential.

When the inflation is getting out of control, you have a lot of very bad market effects. People start buying whatever they can because nothing depreciate more than money, a car becomes a store of value instead of a depreciating asset, thus increasing even further the inflation. That's why it becomes difficult to buy anything in Venezuela, nothing is worth selling because money is less valuable than whatever asset you already have.

Great point! People want to get out of money as soon as they get it. The money velocity essentially approaches infinity as its value drops faster.

In this case, I think a new money supply is needed or no one will want to sell anything, as they’d be stuck with a much more depreciatimg asset.

I have a simple definition of money that I haven’t seen anywhere else:

Money is the most liquid asset in an economy.

What would that be in Venezuela at the moment? Rice?

> In this case, I think a new money supply is needed or no one will want to sell anything, as they’d be stuck with a much more depreciatimg asset.

Yes indeed, that's exactly how they solved this issue in Brazil: https://www.npr.org/sections/money/2010/10/04/130329523/how-...

Similar approaches were used during the French revolution [0], after the American revolution [1], and by the Nazis before the war [2].

[0] https://en.wikipedia.org/wiki/Assignat [1] https://en.wikipedia.org/wiki/Early_American_currency#Contin... [2] https://en.wikipedia.org/wiki/Reichsmark

People sometimes barter in the short term, but usually end up using another currency. In modern times, it's often dollars.

Vast majority of people had no safeguards in place, and saw their savings vaporize. This has led to widespread poverty, and reliance on government handouts for survival.

There's thousands of people everyday that illegally emigrate on foot to Colombia, Ecuador, Peru, etc. Some people have been able to acquire foreign currency in the black market.

If it's anything like my grandma told me about what her mom said about how it was back in germany, people will just buy everything they need for a month the moment they get their paycheck. All money that is left over is then used to fire the oven or cover the walls where repairs are needed or even fed to the livestock. The money was essentially worthless within a week, after that it was less useful than the materials it was made of so people used it for that.

(Oh and another fun one was always when my grandma tells of the month where the money wans't enough for a month they had to live of their own potatoes exclusively for 2 weeks cutting into their income)

They flee.

If you earn in the local currency you're toast.

If you're lucky enough to be in a position where it's possible, hold other currencies in foreign accounts.

For the other 99% of the population, you just can't deal with it. Venezuela is literally a failed state right now. Even well-off people literally cannot afford to buy bread and rice, never mind "luxuries" like medicine.

Just to put the 1 million bolivar coffee in perspective - the current monthly minimum wage is just over 5 million bolivars.

Right, but there are 31m living in Venezuela. Even presuming a couple of million have fled, there's still a lot of people there. If nobody can afford bread and rice, how are coffee shops still operating? The linked video shows people still looking reasonably well fed and well clothed and walking around. Shouldn't they be literally lying in the streets starving?

We often read about these cases of runaway inflation and market collapse, and from the way they're described, it seems logical that the result would be completely antithetical to human survival. And yet, somehow, these societies do seem to stagger along. The question is: how? What is the day-to-day reality for people in these places? How do they get the food and water necessary to stay alive?

Venezuelans lost on average 11kg (25lbs) in 2017 and 90% of the population is now living in poverty [1]. Also, this report was from when inflation was a measly 1,000%, never mind the current 1,000,000%. People ARE starving.

[1] - https://www.reuters.com/article/us-venezuela-food/venezuelan...

They locally refer to it as the Maduro Diet

The linked video shows people still looking reasonably well fed and well clothed and walking around.

My guess is they are people with government connections that allow them to buy dollars at a discounted price and then sell them for a huge profit.Or just pay directly in dollars. In any case, the government has the security forces and a huge civilian militia, so it won't starve, no matter what is happening to anyone else.

I can’t find the opinion piece from WaPo I posted here a few months ago, but basically the author had said that in hyperinflation, it’s not that things get more expensive, but that money breaks down.

He used an example of buying a can of tuna as soon as you get paid. If you wait you won’t be able to afford that tuna with the same paycheck again and even if you don’t want the tuna now you may need it later, or it could be more useful for bartering than cash.

Basically you get rid of your cash in favor of tangible goods ASAP at every opportunity.

Talking to people in Argentina in 2015, I realized that 40% inflation also brings many headaches that we are not used to with a 2% rate.

I grew up in Brazil in the 80's. There was hyper inflation, though not quite up to the 1M percent level that Venezuela is facing. (1M percent is a collapse, something else entirely)

Coping mechanisms:

- Money in saving accounts gets instantly shifted into more stable financial assets so the "returns" are approximately the inflation rate.

- Banks get really good at working fast. We had same-day nation-wide cross-bank settlement of checks.

- "Proxy" stable semi-currencies are used. The government would post several daily indexes like UFIR, TR, which could be used to refer to approximately stable values over a period of time. (one of those indexes, URV, eventually became the currency that is used today.)

- Products don't have prices stamped on them. For example, monthly magazines would have alphabetic codes that could be converted to their actual cost by looking at a table which was updated every few days. (You can see the remains of this system in used book stores where books are sometimes still stamped with small zodiac signs, though the tables are no longer updated)

The basic flow of life is: get paid, _immediately move money to a bank account or you are dead_, get used to the idea that value denominations increment over time. In practice you are constantly thinking in terms of indexes rather than the "real" monetary value.

> _immediately move money to a bank account or you are dead_

So the "bank account" you are refering to is (or is a practically automatic gateway too) one of those "more stable financial assets" you mention above.

The fact that the banks can be trusted to do that is a sign of some kind of orderliness. I wonder if such an option exists in Venezuela right now.

Oh, for sure. Inflation was the result of the government failing to manage its debt. Institutions, businesses and the law still existed. Even the mechanisms for coping with hyperinflation were market innovations (like incredibly fast banking in a gigantic third world country in the 80s, or the financial instruments backing savings accounts). I'm not sure that Venezuela has any of that at the moment.

Do employers offer some sort of dynamic pay system where they can move money to staff with that same sort of urgency?

(This was in the 80s/early 90s so none of the mechanisms are needed anymore)

The urgency of payment was handled implicitly by the banks. Salary payment was traditionally done using checks (back in those times, later bank transfer) where one would go personally to the employer's treasury, get a check, and absolutely had to go deposit that check on the same day or lose a non-trivial chunk to inflation. Settlement happened on the same day before midnight. (A system based on physical pieces of paper and signatures moved money faster in the 80's in Brazil than electronic bank transfers in Europe today.)

As for deciding what amount should be paid: there were rules to define by how much salaries would grow month after month, compensating for inflation, so it would even be possible to prepare the checks a few days before pay day. Inflation was high but the inflation rate wasn't that unpredictable month-to-month.

A ton of them play Oldschool Runescape where they can either do a repetitive task at around 25c usd worth of gold per hour (can do it on 2-3 accounts simultaneously)then sell it at the end of the day for btc/usd. The type of account required for that would take 1 month to create and about $17 usd in membership/items. Others offer services like training your account up. As to how they spend it who knows. I donated my account to one when i quit, it has the levels to make $2 usd per hour.

So their government is basically bankrupted and have 0 credibility, in literal sense. What could it do to save itself, except being overthrown by its people?

The government armed supporters creating a massive paramilitary force.

This will end in a civil war.

They are suffering from meta inflation.

How about a gold standard?

Good long article on Venezuela and the history of oil

https://foreignpolicy.com/2018/07/16/how-venezuela-struck-it...

Discussion from yesterday https://news.ycombinator.com/item?id=17590637 (22 comments)

Honest question: Why don't they just adopt bitcoin and stop this madness?

Who is "they"?

From the headline I'd say Venezuela seems a good candidate.

However this ignores the reality that they can already not buy any useful amount of bitcoins with their currency and mining is unrealistic.

Maybe some altcoin might work, but then a lot of vendors would need to switch as well.

The government of Venezuela has no reason to replace a currency they control with one they don't. Switching to cryptocurrencies will definitely not solve the many systemic issues in Venezuela so the government would still end up with a broken economy and on top of that they wouldn't control the currency anymore. That doesn't make sense. Switching to bitcoin won't make the Brent price go up.

The people could individually decide to switch to cryptocurrencies (or dollars, euros, bottle caps etc...) and get others to accept it but then you have the problem of purchasing this currency in the first place and it still doesn't solve the underlying issue of the broken Venezuelan economy. You could be a bitcoin billionaire in Caracas right now, if the shop doesn't sell toilet paper then it doesn't sell toilet paper. On the other hand if you have bolivar bills...

It's not the bolivar that's broken, it's the Venezuelan economy. This ridiculous inflation is a symptom.

If they cannot control currency, may be they should give up this control?

It would fail for the same reason the economy has already failed. The government does not respect the private property rights of individuals or businesses. As such any attempt to generate wealth ends when someone in power decides to take it.

When governments fail to protect the private property rights of their citizens, be it physical property, financial investments and savings, to the income they earn, poverty will result for the majority.

The economy failed because it was completely dependent on oil. When the oil price went down the economy went bust. It's only at this point that the socialist politics failed the people by not making the drastic and painful cuts that would've kept the country afloat.

Lack of protection for the private property probably didn't help but making that the main cause for the Venezuelan collapse is a very ideological stance to have IMO. Insert here the obligatory "look at china" counter-example.

As far as I can tell the only way to really avoid this catastrophe would've been to diversify the Venezuelan economy in decades past (something Chavez promised to do but didn't) but nobody did it, regardless of political affiliation. "Free money coming straight from the ground" is just so much easier for a politician than making a complex and potentially impopular long term economic reform.

China is not a great counter example. Chavez actually did things to redistribute wealth, and when certain goods got too expensive they fixed prices, and when the businesses failed or refused to operate at a loss they were nationalized.

China has a state plan and they invest in businesses. That means they provide resources to businesses instead of taking them away. Maybe that sounds like just better implemented socialism. Or maybe it's just literal capitalism on a scale never before seen. Think about it. What does the government of China provide to its citizens? If you are poor in China, will the government take care of you? No. It might provide you with a job, though. The USA is more socialist than China, the government will provide food, housing and even medical care for you and your children. You cannot be refused from an emergency room because you cannot pay. A few extremely wealthy people run China, and make decisions that are in their best interests. They invest their capital to get returns. Sounds like capitalism to me.

To be clear I wasn't stating that the situation in China is equivalent in any way to that of Venezuela, I just felt it was a bit strange to root the current woes of Venezuela solely on lack of free market basically. It probably doesn't help but what killed Venezuela in the end is their complete reliance on oil money and complete lack of plan B when it crashed.

I'm pretty certain that if the right had been in charge when the crisis happened things would've played out mostly the same (I don't believe for a second that the right would have better diversified the economy for the same reason that the socialists didn't, nobody says no to free money), the main difference being that they would have cut all the benefits to the poor immediately to cushion the fall a bit and they'd have let papa USA bail them out in exchange for a de-facto feudalization of their economy. I agree that it would probably have turned better for the Venezuelan people (at least in the short term) but socialism vs. capitalism is not really the cause of the crash, it's more about the recovery or lack thereof. If the petrol infusion had kept going I'm sure people would be chanting Dear Leader's name in the streets, whoever that would be.

Oil is not too far from the all time highs, it's certainly much higher than when Chavez took over. Why isn't everything better? They killed basic market economics, including (especially) in the oil industry. They made it so people are afraid to invest in business in Venezuela. They didn't want to admit that their policies were killing the economy, so they doubled down which just made it worse.

Observably also when they protect the private property rights of their citizens too much.

Yes, other altcoins like Nano with 0 fees are increasingly being adopted, hope they help with the problem.

"Increasingly being adopted" where?

From the post title: "Venezuela's Inflation to Reach 1M Percent"

If I'm correct, I'd say "they" refers to "Venezuelans", that is, the inhabitants of Venezuela.

Venezuelan government wants to maintain control over money creation (and print as needed). They actually came out with their own cryptocurrency, the Petro, which is backed by national oil reserves.

Can Bitcoin handle the entirety of the Venezuelian Economy right at this moment down to every single cup of coffee and roll of toilet paper?

If the answer to that question is anything but yes, I doubt adopting bitcoin at all will help.

To be clear, the answer to that question is obviously a resounding 'no'.

We decompose the problem and some smaller problems one by one. All large enough transactions could be settled with bitcoin. Which means industry could start to operations again.

People who don't what to follow this tried and true approach of solving smaller problems usually don't want problem to be solved at all.

Industry cannot work in huge transactions alone.

They also need pencils, toilet paper or the odd USB cable.

The industry cannot work without paying the workers and the workers won't accept pay they can't use to get a coffee.

Yes, but they can buy food and housing in bulk with bitcoin easily, so this is way better than they have it now.

Worrying about coffee seems unrealistic, "let them have a cake"-like thinking.

Not really. Buying Food and Housing works in the current currency too, through inflation it's even enforced. If you don't buy it now your money is worthless.

And buying coffee is just an example for small transactions that most people rely on, people want to do small penny transactions all the time to buy food not in bulk but as they need it. Buying in bulk is usually bad not only because it's happening due to the failing economy but also because it leads to more spoilage and rotten food being thrown away. That's bad for the environment.

Or they could just use the dollar, or even the currency from one of their close neighbours that hasn't gone belly up.

Transaction fees for bitcoin rose to what, 50-ish USD during the December madness? (when the network was saturated).

Just imagine the network congestion if all of Venezuella's business start using bitcoin to settle their transactions, even if they're batched into large amounts. No way 7 tx/s is enough.

"Venezuela’s inflation will skyrocket to 1 million percent by the end of the year as the government continues to print money to cover a growing budget hole, the International Monetary Fund predicted on Monday."

If you're not talking about the government, who obviously like printing money, then the issue is that people are paid in the local currency and have no choice and shops may be forced to accept it. The black market has long ago dealt in USD. Bitcoin doesn't help anyone since people don't have enough money to eat, let alone buy computers or mobile phones. Also Bitcoin is not a hard, ie stable, currency.

USDT is stable and much easier to move across the border into the country than USD itself

Even if we assume Tether to remain stable, that doesn't solve the fundamental problem of even getting someone to buy local currency in exchange for fake Dollars.

Is not that they don't have money to eat, they don't have enough food to eat. As I see it, at the hear of the issue is broken economics. Sound money, like bitcoin, could be a great solution to several problems of economics of Venezuela.

> bitcoin, could be a great solution to several problems of economics of Venezuela

Bitcoin's volatility is the opposite of what Venezuela needs. About the only proven solution for hyperinflating countries with poor institutions is a currency board [1]. You peg the local currency 1:1 to an external currency. If that doesn't work, you switch to a hard currency.

[1] https://en.wikipedia.org/wiki/Currency_board

Indeed. Stable currencies, USD, EUR, CHF, JPY, GBP (even with brexit)

Many other currencies are also stable - the NZD for example, but I suspect (with no proof either way) a large change in their use may cause issues.

Typically USD is chosen, as that is the international currency of oil. EUR is I think second, mainly for political reasons.

> Bitcoin doesn't help anyone since people don't have enough money to eat, let alone buy computers or mobile phones.

It's not at US levels, but many already have mobile phones:

https://en.m.wikipedia.org/wiki/List_of_countries_by_smartph...

Really though, many Venezuelans have turned to crypto. There are more sales in Venezuela than in China according to localbitcoins data, and a lot of them are buying mining equipment because energy is still heavily subsidized:

https://www.economist.com/the-economist-explains/2018/04/03/...

The question was originally buried but one of its premises is really good: to the extent bitcoin has some utility eventually, it's about putting a floor on gross macroeconomic malpractice like in Zimbabwe or Venezuela. It can give people a currency to flee to in emergencies. One that is easier to get and store and harder to seize than dollars.

The real question is why aren't even more Venezuelans using it. Whatever is preventing mass adoption in a crisis should be what cryptocurrency experiments should probably focus on, and most probably involve tradeoffs with crypto idealism. Things like:

1. Value stability. Maybe you can get that with more competing tethers.

2. Predictable and low transaction costs. Maybe let ideal clearing rates, target tx per min, affect round length.

3. More usable, but trustworthy implementations. Ie, dead simple, never see any keys. Bitcoin needs whatever Dropbox did to rsync.

4. Better options to do off chain transactions without deposits for counterparties where you have some trust, or know you can go back to that shop or person if they double spend.

5. Some system of revocation for the most extreme and undisputed fraud or thefts.

6. Wallet penetration. How cheap can a specialized wallet device or phone with an app get?

Some of those would irritate bitcoin purists, but they are the things that make people trust your system.

Some cryptocurrency will probably offer those things at some point and fall on its face just to prove me wrong, we'll see.

> many Venezuelans have turned to crypto

Who do you think has access to lots of subsidized electricity and hard currency with which to buy mining equipment?

> Who do you think has access to lots of subsidized electricity...

It's a great question, and an incredibly quick reply!

I would like some time to consider it carefully, but recommended you check out the article I originally linked which includes more details in the meantime.

It’s the cronies. They get first dibs on the hard currency exports produce. They also control the power infrastructure.

I guess lack of knowledge and infrastructure. Cryptocurrency requires computers and internet connection whenever you want to make a deal, participants should know how to operate those things.

Otherwise, despite its shortcomings, it would be kind of a god-sent in this kind of situation. However, I'm sure the government would try to prevent wide adoption.

Crypto isn't the solution to every problem.

AFAIK some Venezuelans are. But the country's infrastructure is not exactly in the greatest of shapes to support actually using it.

they have adopted dollars already. seems good enough.

In many ways it's actually better. It's just different banknotes and potentially coins. You don't need to change the way you do business, like you would with Bitcoin and people don't necessarily understand Bitcoin.

People may not like it, but the US dollar is a stable currency, it's reasonably well managed and importantly the Venezuelan government can do anything weird with it.

Most crypto coins aren't as unstable as the Venezuelan currency, but still much less stable than the US dollar or Euros, so it's not actually that attractive as an alternative.

The government pays state employees in bolivar, not bitcoin. Probably because the government doesn't have any bitcoin to pay workers with.

> Why don't they just adopt bitcoin

It's easier to barter or use hard currency. When you're at 1 million percent inflation, you don't want to have to rely on having electricity and network access to buy food. Moreover, pitching people on a new currency in the midst of a currency collapse is an uphill battle.

Realistically, they've already adopted the dollar.

Are the regular international credit card systems still working in Venezuela?

Ah Bitcoin, the stable currency. /s

A far more realistic approach is to adopt another country's stable currency (e.g. US dollar).

It's mostly unstable up. Virtually anyone who holds Bitcoin over 1 year sees their savings not lose value, often with a good upshot, unlike _every_ currency in the world.

(1) BTC does not always go up. It suffered 100% inflation during 2014.

(2) Even if its value "unstable upwards", rapid deflation of currency is just as harmful as rapid inflation.

(1) BTC _always_ goes up. It did not annihilate after 4 giant bubbles with dramatic corrections. Only people with strong irrational denial who finally buy during the maximum frenzy have to wait a couple of years to return to black. Everyone else has to wait much shorter and then hold with a peace of mind.

(2) It is not harmful to people going long with their own money, but it is a huge risk to margin traders (both those going short and long, but on a loaned capital). But this is a positive thing because that's how you get the sound money bootstrapped: by incentivizing long-term holding and disincentivizing wild speculation.

> It is not harmful to people going long with their own money, but it is a huge risk to margin traders

Yes, appreciation on assets is great for owners.

But when talking about currencies (i.e. standard medium of exchange), it is the overwhelming consensus that deflation -- especially rapid deflation -- is harmful to an economy. The Great Depression being the most dramatic example of a deflationary spiral.

https://en.wikipedia.org/wiki/Deflation#Effects

So you are saying, fractional reserve, paper money indistinguishable from IOUs and subsequent credit expansion blessed and coordinated at the federal level (with creation of the Fed) are totally not among the reasons that caused market distortion and subsequent collapse?

When will a superpower (China or USA) step in and end this miserable spiral? An effective military action and instalment of a puppet government, followed by a free reign to multinational oil companies should swiftly end the miseries being endured by the Venezuelan populace.

And the moment that happens every single bad thing in Venezuela for the past 15 years and the future 1,000 years will be their fault. The entire world would condemn the USA as imperialists and there would be protests in the streets. Europeans would scoff at American brutality. And 5 more Chavezs with their socialist revolutions would be born, raging against US hegemony. That's what Chavez did in the first place, he was "protecting Venezuela from the imperialist USA". All the problems caused by his socialist revolution were actually because of US interference. There are still people today, here in this board, that believe that.

Name one (developing) country that was improved by US interventionism. I can name a dozen that were destroyed, ransacked by US businesses, genocides committed, etc.

I was arguing against US intervention. But since you asked... Mali. When i was there the local pharmacist had a picture of president Ford, of all people, up. Turns out the US had run a program to eradicate a particularly nasty parasite in the region. They'd also built the road, the irrigation canals that allowed them to grow rice, and the bridge that connected them to the other markets. I'm American and i don't know this stuff, gauranteed this is not being reported in the foreign press.

Kenya is one of the more stable countries as far as Africa goes. When i was there i was surprised to learn from the local newspaper that the majority of their governments entire budget is foreign aid, much from the US. They use that money to pay Chinese (not American) companies to build infrastructure.

My Iraqi friends, particularly a friend from Mosul, criticized the US. Apparently the problem wasnt that the US came (Hussein was largely feared and hated, and abused his people), but that they didn't take enough control, and so left a power vacuum which was filled by criminals (which would probably happen in Venezuela). However more recently the downfall of ISIS can be credited to US intervention.

My Libyan friends were frustrated by the US lack of intervention, though a little help was provided. It's amazing how oppressed people don't have a voice. I didn't know they hated Gaddafi until the revolution happened, then they were so incredibly passionate.

South Korea. Or do you think North Korea is better?

Every country in Europe. Especially Eastern Germany. But you deliberately exclude them. However a few eastern European countries had some US airstrikes to stop genocide, which actually seemed to work pretty well.

Pretty much every developing country that has been peaceful and stable has received large amounts of monetary, economic, or other aid from the US.

How do you quantify bad things that didn't happen? I would posit that since the end of WW2, the entire world on average has been more peaceful and prosperous than any other time in history. Billions pulled out of poverty. The vast majority of people living their entire lives without experiencing war.

But again, for both the US and Venezuela's sake, I think it is important the Venezuelans fix this.

We're on it:

https://www.businessinsider.com/ap-us-official-trump-pressed...

> The US official said Trump was specifically briefed not to raise the issue and told it wouldn't play well, but the first thing the president said at the dinner was, "My staff told me not to say this." Trump then went around asking each leader if they were sure they didn't want a military solution…

> For Maduro, who has long claimed that the US has military designs on Venezuela and its vast oil reserves, Trump's bellicose talk provided the unpopular leader with an immediate if short-lived boost as he was trying to escape blame for widespread food shortages and hyperinflation…

> A few weeks after Trump's public comments, Harvard economics professor Ricardo Hausmann, a former Venezuelan planning minister, wrote a syndicated column titled "D Day Venezuela," in which he called for a "coalition of the willing" made up of regional powers and the US to step in and support militarily a government appointed by the opposition-led national assembly.

see replies to https://news.ycombinator.com/item?id=17600110

I'll mince no words: what an appallingly stupid idea.

First of all, do you think the US would do anything about anything, out of the goodness of their heart? Hah. Maybe you believe their interventionism is part of their efforts to build world peace, or maybe to, how do they say, "spread freedom and democracy"? Such naivety. The US protects its own interests and those of its business owners. If that means overthrowing democratic governments, so be it, if that means genocide, so be it, etc.

Second of all, the callousness with which you propose simply installing a puppet and letting the US govern the country is beyond description. Tell me, how would you feel if a foreign power decided you don't know how to govern your country, and that you need rescuing, and that from now on he would be in charge and dictate how your country gets run. Would you like it? If the answer is, as it must, "no I would not", then the only conclusion I can draw is that you view the Venezuelans as somehow incapable of making the right decisions and ruling themselves. As babies, or morons. Colonialist thinking, nothing else.

Thirdly, your point about letting oil multinationals ransack the country, and how that would, somehow I guess, improve the lives of the population. I won't comment on this one, because I cannot even fathom the train if thought here.

> First of all, do you think the US would do anything about anything, out of the goodness of their heart?

No, they would do it because there is massive money to be made. The Venezuelan people and oil reserves are a great untapped resource, no use letting an entire country go to waste.

> the only conclusion I can draw is that you view the Venezuelans as somehow incapable of making the right decisions and ruling themselves.

Isn't that blindingly obvious by now? What more evidence do you need in support?

> I won't comment on this one, because I cannot even fathom the train if thought here.

I never mentioned anything about "ransacking". Multinational companies are ultra-efficient and very beneficial to their employees and partners. Let them freely do what they do best, and they will generate great wealth in Venezuela. Everybody wins. The communists lose. What's not to like?

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