Venezuela, Gallery: Stacks of Nearly Worthless Cash Required to Buy Common Items
August 17th, 2018I’ve been teaching my children about inflation, fiat currencies and the end result of the scam. This photo gallery is excellent for that purpose.
Via: Reuters:
Jittery Venezuelans on Friday rushed to shops and formed long lines in preparation for a monetary overhaul that will remove five zeros from prices in response to hyperinflation that has made cash increasingly worthless.
Shoppers sought to ensure their homes were stocked with food before the measure decreed by President Nicolas Maduro takes effect on Monday, on concerns that confusion among merchants and overtaxed banking systems could make commerce impossible.
Inflation hit 82,700 percent in July as the country’s socialist economic model continues to unravel, meaning purchases of basic items such as a bar of soap or a kilo of tomatoes require piles of cash that is often difficult to obtain.
Related: Whatever Happened to Penny Candy? by Richard J. Maybury
Where did the author get these USD prices? Are they supposed to represent what Venezuelans pay in USD? I didn’t know Venezuelans could pay in USD anymore. Or, if they exchange any USD they have for Venezuelan money, are the prices the amount in USD they had to give up to get enough Venezuelan money to buy the items? Do many ordinary Venezuelans still have USD stashed away to exchange with? Or, are the prices supposed to be what we in the US pay in USD for these items? If the last, a kilo of tomatoes is not 40 cents in any grocery store I’ve heard of, nor is a roll of toilet paper 76 cents, etc. Multiply the USD amounts shown by 3 or 4 and you get the prices people really pay in the US. The point of the pics may still be valid, but it leaves the US reader wondering — if grocery items are really that much cheaper in USD in Venezuela than in the US, it would be a much cheaper place for our retirees to take their social security dollars and migrate to. They’d leap from an income of, say, $25,000 in the US to the equivalent of $75.000-$100,000 in Venezuela. Or, if the prices are supposed to be from within the US, then the article is untrustworthy. ???
Those are the local prices, but the government sets the prices. There is no functioning market economy in Venezuela, except maybe the black market.
See: Price controls:
https://mises.org/wire/price-controls-are-disastrous-venezuela-and-everywhere-else
https://www.theguardian.com/global-development-professionals-network/2015/apr/16/venezuela-economy-black-market-milk-and-toilet-paper
As for spending your social security check in Venezuela… It’s hard to know where to start to respond to that.
Do you realize that government food convoys are attacked by mobs of hungry people???
https://www.mercurynews.com/2018/01/30/venezuelans-loot-to-eat-amid-economic-tailspin/
I didn’t say there was a market economy in Venezuela. I only pointed out that the prices for the items shown in the article are lower there than in the US.
I was responding only to what was in the article and trying to keep my beliefs and biases about that country out of my response. If the article mentioned hungry mobs,I missed that part.
My social security remark was made tongue-in-cheek to point out that this article, in itself, does not provide sufficient information to justify the conclusion that the devaluation of Venezuelan money is a bad thing when compared with the financial conditions of people in other countries,
such as the US.
I intended to promote critical thought about how governments manipulate the street value of their money and how that impacts their people, not just the Venezuelan govt but others where fighting in the streets for food has not yet come to pass.
If the US govt were to ask the world to turn in its paper US dollars and take gold in exchange, how many zeros do you think would be taken off the value of those US bills so that the gold the US has would be sufficient to cover the exchange?