Results 1 to 26 of 26

Thread: Venezuela is on the brink of a complete economic collapse

  1. #1

    Venezuela is on the brink of a complete economic collapse

    Even triple-digit oil prices, as Justin Fox points out, weren't enough to keep Venezuela out of the red when it was spending more on its people but producing less crude. So it did what all poorly run states do when the money runs out: It printed some more. And by "some," I mean a lot, a lot more. That, in turn, became more "a lots" than you can count once oil started collapsing in mid-2014. The result of all this money-printing, as you can see below, is that Venezuela's currency has, by black market rates, lost 93 percent of its value in the past two years.

    It turns out Lenin was wrong. Debauching the currency is actually the best way to destroy the socialist, not the capitalist, system.


    Venezuela's government has tried to deny economic reality with price and currency controls. The idea was that it could stop inflation without having to stop printing money by telling businesses what they were allowed to charge, and then giving them dollars on cheap enough terms that they could actually afford to sell at those prices. The problem with that idea is that it's not profitable for unsubsidized companies to stock their shelves, and not profitable enough for subsidized ones to do so either when they can just sell their dollars in the black market instead of using them to import things. That's left Venezuela's supermarkets without enough food, its breweries without enough hops to make beer, and its factories without enough pulp to produce toilet paper. The only thing Venezuela is well-supplied with are lines.
    Tick tock....



  2. Remove this section of ads by registering.
  3. #2
    Lets hope it doesn't end with killing fields or something crazy like that.
    Quote Originally Posted by BuddyRey View Post
    Do you think it's a coincidence that the most cherished standard of the Ron Paul campaign was a sign highlighting the word "love" inside the word "revolution"? A revolution not based on love is a revolution doomed to failure. So, at the risk of sounding corny, I just wanted to let you know that, wherever you stand on any of these hot-button issues, and even if we might have exchanged bitter words or harsh sentiments in the past, I love each and every one of you - no exceptions!

    "When goods do not cross borders, soldiers will." Frederic Bastiat

    Peace.

  4. #3
    In a lot of ways this national currency collapse really just has to do with the current collapse of oil in broader markets. In one year they went from net winners to net losers because of oil prices on a GDP level.

    'We endorse the idea of voluntarism; self-responsibility: Family, friends, and churches to solve problems, rather than saying that some monolithic government is going to make you take care of yourself and be a better person. It's a preposterous notion: It never worked, it never will. The government can't make you a better person; it can't make you follow good habits.' - Ron Paul 1988

    Awareness is the Root of Liberation Revolution is Action upon Revelation

    'Resistance and Disobedience in Economic Activity is the Most Moral Human Action Possible' - SEK3

    Flectere si nequeo superos, Acheronta movebo.

    ...the familiar ritual of institutional self-absolution...
    ...for protecting them, by mock trial, from punishment...


  5. #4
    Venezuela is on the brink of a complete economic collapse
    Lies! That's just a bunch of capitalist-running-dog lies, I tell you!

    Economic Czar of Crisis-Hit Venezuela: Inflation 'Does Not Exist'
    http://www.economicpolicyjournal.com...venezuela.html
    Robert Wenzel (08 January 2016)

    Venezuela's new economy czar Luis Salas is tasked with controlling what is believed to be the world's highest rate of inflation, reports Reuters.

    President Nicolas Maduro on Wednesday tapped the 39-year-old as vice president for the economy amid soaring consumer prices and chronic product shortages.

    He has a tough task ahead of him. A late 2015 Bloomberg headline: Venezuela sees 85 pct inflation this year.

    So what does Venezuela's new economic czar think about this?

    "Inflation does not exist in real life," he wrote in a 2015 pamphlet called "22 Keys to Understanding the Economic War." "When a person goes to a shop and finds that prices have gone up, they are not in the presence of 'inflation.'"

    Salas has argued against the idea that the printing of money causes inflation. He insists prices rise primarily because corporations seek excessive profit margins.

    Notes Reuters:

    The appointment of Salas appears to signal a break with the Socialist Party's promises for market-friendly reforms last year, which ended in aborted efforts to liberalize cumbersome currency controls.

    His designation augurs a further tightening of state controls in a country where supermarket lines routinely stretch for blocks...

    Salas' numerous online essays are written in flowing academic prose featuring caustic turns-of-phrase such as "speculative-parasite-vulture capital" or "global war of the planetary plutocracy."

    Few offer specific policy proposals. One list of ideas for economic policies for 2016 published on Salas' blog includes a recommendation that economic policy should be "coherent" and "should not be passive but rather active and on the offensive." [...]

    He has held up as an example of success the 2013 "Dakazo" in which troops took over a group of businesses including electronics retailer Daka and ordered them to slash prices.

    "The first thing we can conclude is that prices can be controlled and speculation tied down if there is a combination of state guarantees and mobilization of the people," Salas wrote.

    How bad could it get in terms of controls and socialist oppression under Salas?

    Pedro Rosas Rivero at America 2.1 gives us a clue:

    [...] The new cadre of economic advisors comes from a hard-left fringe within chavismo, as scary as that sounds. If their policy proposals are enacted, they will bury Maduro and chavismo under a mountain of worthless paper money. But not before unleashing havoc and pain on our economy and society. The most prominent of The Undertakers are Tony Boza, Luis Salas, and a Spaniard linked to Podemos, Alfredo Serrano. The first two have been around chavismo for years, without gaining much influence. They held posts in obscure government institutions and universities, appearing frequently in the chavista media, and writing books and pamphlets on the “economic war”. Salas just broke into the limelight, as the new Vicepresident for Economic Policy and minister without portfolio for Economic Productivity.

    [...]

    They favor controls on basically everything. For them, existing exchange controls have been a resounding success, with just a few minor details to adjust. Their craziest proposals include nationalizing all foreign trade and the banks, controlling every price in the economy, – all of them – and seeking ways to involve all citizens in the enforcement of official prices.

    In a country struggling through an economic depression and on the brink of hyperinflation, their views on inflation and the exchange rate – the two must pressing issues today for the Venezuelan economy – are genuinely dangerous. Their proposals, if enacted even half-heartedly, can be expected to push Venezuela over the hyperinflation edge.

    They believe inflation in Venezuela is caused by the “speculative profit margins” of private companies (Boza), the power of private importers (Serrano) and selfishness (Salas). More importantly, they claim that the massive financing of the government’s deficit by the Central Bank is not the problem. Judging from Maduro’s recent decision to essentially expropriate the Central Bank, they intend to speed up the money printing madness.

    [...]
    The Bastiat Collection ˇ FREE PDF ˇ FREE EPUB ˇ PAPER
    Frédéric Bastiat (1801-1850)

    • "When law and morality are in contradiction to each other, the citizen finds himself in the cruel alternative of either losing his moral sense, or of losing his respect for the law."
      -- The Law (p. 54)
    • "Government is that great fiction, through which everybody endeavors to live at the expense of everybody else."
      -- Government (p. 99)
    • "[W]ar is always begun in the interest of the few, and at the expense of the many."
      -- Economic Sophisms - Second Series (p. 312)
    • "There are two principles that can never be reconciled - Liberty and Constraint."
      -- Harmonies of Political Economy - Book One (p. 447)

    ˇ tu ne cede malis sed contra audentior ito ˇ

  6. #5
    So the Venezuelan economy have been run the same way for decades now with little to no problems and all of a sudden we have this crisis. I wonder what changed? Hint, its the sanctions and drop in oil prices and not so much the socialism that is causing the economic crises. Btw, the Nigeria economy which depends heavily on oil revenues is not doing very well either to the point that they now have capital controls in all the banks.

  7. #6
    Probably just don't have enough government.

  8. #7
    Quote Originally Posted by Ronin Truth View Post
    Probably just don't have enough government.
    Exactly!

    More suits will fix their woes..

    Suits and tech employment......

  9. #8
    Feel the Maduro
    Quote Originally Posted by Ron Paul View Post
    The intellectual battle for liberty can appear to be a lonely one at times. However, the numbers are not as important as the principles that we hold. Leonard Read always taught that "it's not a numbers game, but an ideological game." That's why it's important to continue to provide a principled philosophy as to what the role of government ought to be, despite the numbers that stare us in the face.
    Quote Originally Posted by Origanalist View Post
    This intellectually stimulating conversation is the reason I keep coming here.



  10. Remove this section of ads by registering.
  11. #9
    Quote Originally Posted by presence View Post
    In a lot of ways this national currency collapse really just has to do with the current collapse of oil in broader markets.
    Yep.

  12. #10
    Quote Originally Posted by Henry Rogue View Post
    Lets hope it doesn't end with killing fields or something crazy like that.
    The solution to all human problems is violence. People don't know how to use their words. Permanent time-outs for everyone.
    All modern revolutions have ended in a reinforcement of the power of the State.
    -Albert Camus

  13. #11
    Quote Originally Posted by Suzanimal View Post
    Feel the Maduro
    Meh neither parties can fix their own gov.
    One Party is Pro Bush/Pro exporting oil.

    Exporting more oil would crash the oil industry now.

  14. #12
    When Government Fails—Venezuela Edition
    http://blog.independent.org/2015/09/...zuela-edition/

    Some people look at the conditions in Venezuela and point to oil prices as the source of many of its problems. The Venezuelan government, led by President Nicolás Maduro, blames opposition leaders for the nation’s many issues. (He also blames Spiderman. No, really. You can read about it here.)

    But the villain in this situation is obvious to anyone with an understanding of basic economics. The maleficent actor here is the Venezuelan government. Who is responsible for inflation? The government, who is printing money so fast that inflation has reached triple digits. Who is responsible for the squatters (and as a result, the shortage of rental housing)? As I discussed in a previous post, it’s the government, who fails to protect even the most basic private property rights. Who are the protestors rallying against? The government.

    The shortages are also the responsibility of the Venezuelan government. In an effort to control commodity prices, the government has put a cap on the price retailers can charge for particular products. While such prices may be attractive to consumers, they are too low for producers to earn a profit. This causes many would be suppliers to drop out of the market. The end result is surging demand and less supply.
    [...]
    Venezuela is but one of many cases where we see the consequences of bad ideas, bad policies, and unconstrained government. It’s important to recognize that, while we see the shortages, sky-high prices, and black markets as a problem of “other countries,” our own government engages in many of the same activities. Minimum wages, rent controls, other price manipulations, and the printing of mass quantities of money generate the same kinds of consequences in the U.S. as they do in Venezuela or elsewhere. The difference is one of degree, not of kind.
    Based on the idea of natural rights, government secures those rights to the individual by strictly negative intervention, making justice costless and easy of access; and beyond that it does not go. The State, on the other hand, both in its genesis and by its primary intention, is purely anti-social. It is not based on the idea of natural rights, but on the idea that the individual has no rights except those that the State may provisionally grant him. It has always made justice costly and difficult of access, and has invariably held itself above justice and common morality whenever it could advantage itself by so doing.
    --Albert J. Nock

  15. #13
    Perhaps Trump will go help them and leave us alone?
    No one here wanted to be the Billionaire.

  16. #14
    Quote Originally Posted by Lucille View Post
    When Government Fails—Venezuela Edition
    http://blog.independent.org/2015/09/...zuela-edition/
    So are you trying to tell me that Venezuela would be having this same problem if oil prices did not drop like a rock? We see this problem with just about every countey that is heavily dependent on oil revenue. I don't think anybody is saying that socialism help the situation. It is a rotten economic system but what triggered this crisis is the drop in oil prices and sanctions mainly.

    How can someone explain how many govt operating on various forms of economic model all of a sudden have the same sort of problems when oil prices drop. I mean, countries have been running the same type of economic system for years and all of a sudden this happens. It makes not sense to excuse the one vital variable to changed during this peroid.

    Btw, I am one of those that think natural resources of a country should be shared by the citizens of said country. But until I discover a better way of dividing up the resources, I would support a distributive method of sharing that natural resources.

    Below is a article showing the same sort of problems happening in Nigeria. And believe you me, if anything, Nigeria became less socialist since the crisis started.

    Hope the Naira fails
    “GIVE me lucky generals,” Napoleon is supposed to have said, preferring them to talented ones. Muhammadu Buhari, a former general, has not had much luck when it comes to the oil price. Between 1983 and 1985 he was Nigeria’s military ruler. Just before he took over, oil prices began a lengthy collapse; the country’s export earnings fell by more than half. The economy went into a deep recession and Mr Buhari, unable to cope, was overthrown in a coup.

    Now he is president again. (He won a fair election last year against a woeful opponent; The Economist endorsed him.) And once again, oil prices have slumped, from $64 a barrel on the day he was sworn in to $32 eight months later. Growth probably fell by half in 2015, from 6.3% to little more than 3% (see article). Oil accounts for 70% of the government’s revenues and 95% of export earnings. The government deficit will widen this year to about 3.5% of GDP. The currency, the naira, is under pressure. The central bank insists on an exchange rate of 197-199 naira to the dollar. On the black market, dollars sell for 300 naira or more.
    In this section

    The brawl begins
    Hope the naira falls
    Train ’em up. Kick ’em out
    Going after Google
    Let us spray

    Reprints
    Related topics

    Nigeria
    Muhammadu Buhari

    Instead of letting the naira depreciate to reflect the country’s loss of purchasing power, Mr Buhari’s government is trying to keep it aloft. The central bank has restricted the supply of dollars and banned the import of a long list of goods, from shovels and rice to toothpicks. It hopes that this will maintain reserves and stimulate domestic production.

    When the currency is devalued, all imports become more expensive. But under Mr Buhari’s system the restrictions on imports are by government fiat. Factory bosses complain they cannot import raw materials such as chemicals and fret that, if this continues, they may have to shut down. Many have turned to the black market to obtain dollars, and are doubtless smuggling in some of the goods that have been banned.

    In charts: Explore Nigeria’s economy and politics

    Nigerians have heard this tune before. Indeed, Mr Buhari tried something similar the last time he was president. Then, as now, he resisted what he called the “bitter pill” of devaluation. When, as a result, foreign currency ran short, he rationed it and slashed imports by more than half. When Nigerians turned to the black market he sealed the country’s borders. When unemployment surged he expelled 700,000 migrants.

    Barking orders at markets did not work then, and it will not work now. Mr Buhari is right that devaluation will lead to inflation—as it has in other commodity exporters. But Nigeria’s policy of limiting imports and creating scarcity will be even more inflationary. A weaker currency would spur domestic production more than import bans can and, in the long run, hurt consumers less. The country needs foreign capital to finance its deficits but, under today’s policies, it will struggle to get any. Foreign investors assume that any Nigerian asset they buy in naira now will cost less later, after the currency has devalued. So they wait.

    Those who fail to learn from history...

    Mr Buhari’s tenure has in some ways been impressive. He has restored a semblance of security to swathes of northern Nigeria that were overrun by schoolgirl-abducting jihadists. He has won some early battles against corruption. Some of his economic policies are sound, too. He has indicated that he will stop subsidising fuel and selling it at below-market prices. This is brave, since the subsidies are popular, even though they have been a disaster (the cheap fuel was often sold abroad and petrol stations frequently ran dry). If Mr Buhari can find the courage to let fuel cost what the market says it should, why not the currency, too? You can forgive the general for being unlucky; but not for failing to learn from past mistakes.
    http://www.economist.com/news/leader...years-ago-hope

  17. #15
    Quote Originally Posted by juleswin View Post
    So are you trying to tell me that Venezuela would be having this same problem if oil prices did not drop like a rock? We see this problem with just about every countey that is heavily dependent on oil revenue. I don't think anybody is saying that socialism help the situation. It is a rotten economic system but what triggered this crisis is the drop in oil prices and sanctions mainly.
    They were having serious problems years before oil dropped. Foot shortages, riots, you name it. Obviously the drop in oil made it worse but by far the main problem is the government.

  18. #16
    Venezuela needs the CIA, Exxon, BP, Royal Dutch Shell and the FED.



  19. Remove this section of ads by registering.
  20. #17
    Quote Originally Posted by Madison320 View Post
    They were having serious problems years before oil dropped. Foot shortages, riots, you name it. Obviously the drop in oil made it worse but by far the main problem is the government.
    Yea, it also didn't help that Venezuela had a fallout with the US but if the oil prices had been what it is, Venezuela wouldn't be having the problem it is having today. Think of this, the whole economy is 90% or so dependent of the oil sector and 70%(and counting) of that 90% revenue source just disappeared. So 63% of the whole economy disappeared in 2 years and you want me to believe that this played a small role in torpedoing the economic?

    If American govt and businesses lost 63% of their revenue in 2 yrs, there would riots at a level you cannot imagine in the streets of many American cities. the govt would have to cut food stamps, disability insurance, SS, Veteran admin services, even road maintainance work would have to be cut. This would be bedlam everywhere

  21. #18
    Quote Originally Posted by juleswin View Post
    Yea, it also didn't help that Venezuela had a fallout with the US but if the oil prices had been what it is, Venezuela wouldn't be having the problem it is having today. Think of this, the whole economy is 90% or so dependent of the oil sector and 70%(and counting) of that 90% revenue source just disappeared. So 63% of the whole economy disappeared in 2 years and you want me to believe that this played a small role in torpedoing the economic?

    If American govt and businesses lost 63% of their revenue in 2 yrs, there would riots at a level you cannot imagine in the streets of many American cities. the govt would have to cut food stamps, disability insurance, SS, Veteran admin services, even road maintainance work would have to be cut. This would be bedlam everywhere
    Why isn't every other oil producing country falling apart? Maybe oil shouldn't have been 63% of their revenue. Of course, a government has no way of knowing that. Only the market can know that.

  22. #19
    Quote Originally Posted by The Gold Standard View Post
    Why isn't every other oil producing country falling apart? Maybe oil shouldn't have been 63% of their revenue. Of course, a government has no way of knowing that. Only the market can know that.
    They are, the length of their fall have a direct relationship to how highly dependent said economy is to the oil revenues. The same thing is happening to some degree in Russia, Saudi Arabia, Nigeria, Kuwait just to name a few countries that I have read stories on.

    I agree, the oil countries that are feeling less pain today are the countries that diversified their economies. The point that I trying to make is that the problem we are seeing in Venezuela is not so much a problem with socialism (even though I think the profits made from the national resources of a country to be socially distributed between its citizens) but more a result of the drop in oil prices.

    I actually don't know why anyone would want to deny that
    Last edited by juleswin; 02-02-2016 at 10:52 AM. Reason: though not thought

  23. #20
    Quote Originally Posted by juleswin View Post
    The point that I'm trying to make is that the problem we are seeing in Venezuela is not so much a problem with socialism (even thought I think the profits made from the national resources of a country to be socially distributed between its citizens) but more a result of the drop in oil prices.

    I actually don't know why anyone would want to deny that
    Yep. This is the problem. Of course, several countries are in the same boat. Including the U.S.

  24. #21
    Quote Originally Posted by juleswin View Post
    I agree, the oil countries that are feeling less pain today are the countries that diversified their economies. The point that I trying to make is that the problem we are seeing in Venezuela is not so much a problem with socialism (even though I think the profits made from the national resources of a country to be socially distributed between its citizens) but more a result of the drop in oil prices.
    The point is that because of socialism they don't have a diversified economy. The problem is absolutely, 100% with the centrally planned, government owned economy.

  25. #22

  26. #23
    Quote Originally Posted by juleswin View Post
    I agree, the oil countries that are feeling less pain today are the countries that diversified their economies.
    As if the countries with diverse economies centrally planned it that way.

    It seems that you only recognize 2 types of economies, ones with bad central planning and ones with good central planning.

    How do you answer the fact that Venezuela has had terrible problems for many years BEFORE oil dropped?

  27. #24
    Quote Originally Posted by Madison320 View Post
    As if the countries with diverse economies centrally planned it that way.

    It seems that you only recognize 2 types of economies, ones with bad central planning and ones with good central planning.

    How do you answer the fact that Venezuela has had terrible problems for many years BEFORE oil dropped?
    I meant to say "countries with more diversified revenue stream" doesn't mean I was only talking about actions by the govt . I am not just talking about the govt but the people and most of the industries in Venezuela were dependent on the oil industries. Its sorta like what happens to the economy in a mining town when the mines shut down. The city govt runs out of revenue and the private businesses shutter down

    Maybe its the govt's fault or maybe it is the fault of the citizens in the country who were lulled by easy come oil economy who were responsible for not diversifying.

    And how do I answer your question as to why Venezuela had a terrible economy before oil prices? you have to know that one, the oil prices have been slowly going south for about 2 yrs now. And just looking at the graph in the OP, I would assume that that high point followed by the decline signaled the start of the decline in their economy which lines up with my theory that their economic decline started with the decline in oil prices.

    I have said it before, running your whole economy in a socialist manner is not a good thing but for a country like Venezuela and in extreme cases countries like Saudi Arabia, they can afford to run those system when oil money is funding the socialism. My dad told stories of how his students who graduated med schools would have their mortgage forgiven by the King of Saudi Arabia. That is socialism at its finest but their economy still strives in spite of said system.



  28. Remove this section of ads by registering.
  29. #25
    Quote Originally Posted by juleswin View Post
    They are, the length of their fall have a direct relationship to how highly dependent said economy is to the oil revenues. The same thing is happening to some degree in Russia, Saudi Arabia, Nigeria, Kuwait just to name a few countries that I have read stories on.

    I agree, the oil countries that are feeling less pain today are the countries that diversified their economies. The point that I trying to make is that the problem we are seeing in Venezuela is not so much a problem with socialism (even though I think the profits made from the national resources of a country to be socially distributed between its citizens) but more a result of the drop in oil prices.

    I actually don't know why anyone would want to deny that

    No no no. The government $#@!s up everything it touches. Privatize it all.

  30. #26
    Quote Originally Posted by juleswin View Post
    I have said it before, running your whole economy in a socialist manner is not a good thing but for a country like Venezuela and in extreme cases countries like Saudi Arabia, they can afford to run those system when oil money is funding the socialism. My dad told stories of how his students who graduated med schools would have their mortgage forgiven by the King of Saudi Arabia. That is socialism at its finest but their economy still strives in spite of said system.
    They have no work ethic. They literally import workers to do everything for them. They are overweight and lazy. So yeah, socialism at it's finest.



Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •