The Venezuelan Economic Chaos - Part 2
Precisely as of 2014, the increase in public spending began disproportionately, with the increase in ministerial payrolls, the financing of the "Social Missions" (which are nothing more than instruments of ideologization) and the massive importation of finished products that previously they were covered by internal production.
A chain of Government errors that lasted for more than 6 years in the application of macroeconomic policies, are bearing fruit.
In 2017 The Venezuelan Economy is Officially Declared in Hyperinflation.
Despite this, the policies continued to be wrong, accelerating the deterioration of the productive system and the fall of the Gross Domestic Product.
Inflation rates began to grow exponentially with the issuance of "Inorganic Money", thus expanding the money supply without having assets or services to support this new currency, which is not even physically printed.
Image Source
In her article Is $ 200 a lot of money in Venezuela?
by @celi130, my fellow countrywoman said the following:
Price of a basic Family basket
1 $ equals 690,000 Bs.F
Venezuelan worker monthly salary 400,000 Bs F. equals $ 0.531 Kilo milk 6.7 $
1 Kilo cheese 3.2 $
1 egg carton 2.8 $
1 Kilo of pasta 1.5 $
1 kilo of rice 1.2 $
1 kilo of precooked flour 1.3 $
1 Kilo of meat 4.5 $
1 kilo of fish 3.2 $
1 kilo of wheat flour 1.2 $
1 willow $ 2
1 mayonnaise 2.5 $
1 coffee (200grm) 1.2 $
1 kilo grains 2 $
1 kilo of sugar 1.2 $
1 liter oil 1.9 $
Fruits, vegetables and vegetables $ 10Giving a total of 46.4 $, for a week, this amount of food for a family of 4 people (father, mother and two children) that is equivalent if both parents work earning a minimum salary that equals 0.53 $, would be 1.06 $ . What does the Venezuelan buy with that salary, not even for breakfast a day.
Cumulative inflation so far in 2020 is 2,000%.
It's not just Government Policies
As we could see, bad fiscal policies and uncontrolled public spending show the genesis of these critical levels of hyperinflation and economic decline, but the elements of the Venezuelan social crisis also directly influence the rise in prices.
The almost total uselessness, due to the fall in its real value, of the national currency (the Bolivar), has pressured citizens to buy dollars, a fact that in turn detracts from the local sign.
There is no stake in Bolivares
Like in Blockchain protocols, where accumulating a stake of a token demonstrates the trust of users and this, in turn, revalues said tokens, the value of Fiat currencies also depends to a great extent on the trust that its users place in it.
In this way, we can find investments and large contracts that are signed and established in dollars.
If in Venezuela contracts were established in national currency, if Venezuelans had savings capacity and in bank accounts, the "Stakes" of the users were deposited, confidence in the currency could be retaken and in this way, its revaluation could materialize.
But when everyday money loses value exponentially and at the same time, users quickly get rid of this currency (rapidly increasing spending), what is generated is a greater devaluation that causes hyperinflation to increase.
@juanmolina
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Hi @juanmolina
The fact that there is not enough money circulating is something that is not understood outside the country...
And the worst thing of all is that there are still those who support Nicolas' regime... Brainless people who sell themselves for a bag of food. They are not worth anything, here if I am drastic in my opinion. If someone supports this regime, they are far from being a good person. And I expect the same end for them as for the unfortunate ones in power.
It's crazy how from one day to the next, from one hour to the next, everything rises exponentially. It's obvious that behind all this chaos there are great interests in keeping it chaotic. But, everything falls by its own weight. EVERYTHING.
I was wondering perhaps government can come with with some interesting policies that will help to push the economy of the country forward and increase the standard at which people live
Yes, the best measures can be applied but this will not contribute positively while the Donal Trump regime and the US continue with the economic blockade, sanctions, attacks and threats to Venezuela, the US has managed to steal a company called CITGO, which is a Venezuelan company with headquarters in the US, recently up to 3 fuel ships were stolen by the US affecting the distribution of fuel in Venezuela, last year in a public act they even tried to assassinate the president-elect with a drone. In short, as long as the hostile actions by the United States do not cease, our people will continue to suffer, and we Venezuelans will resist.
@tipu curate 3
Upvoted 👌 (Mana: 0/6) Passive income || Compare APR
It's really so sad the Venezuelans have actually been going through this type of unbelievable chaos affecting the lifestyle of citizens and even the economy as a whole! I just hope they get out of this chaos as soon as possible. I think I now know the major cause behind the low value of their currency.
Thanks for sharing this great post with love from @hardaeborla and I hope you have a great day ahead 💓💕❤️
It is really sad that innocent citizens have to pay for this unfortunate happenings in the country which was caused by the set of greedy leaders in the first place, it is not only Venezuela that suffers this plague a lot of country also go through the same pathetic condition.
My friend, in these two issues that you have already published, you express a reality that surrounds all of us Venezuelans. I am sorry to tell you that at this moment, these amounts have already changed again.
I am asking how we can get out of this terrible situation, which the government itself is promoting with its communist economic policies, but only for the citizens; for them it is something totally capitalist.
Translated with www.DeepL.com/Translator (free version)
My country as well is moving towards a high inflation level and this is not stopping the politicians from buying classy and expensive cars, waste resources lavishly while the majority of people living in the country cannot afford two square meals.
Incredible as that chain of errors and disconcerted policies have led us to this situation, which only gets worse every day, the Venezuelan's pocket has been hit hard these days and that seems to continue during this month, because those prices keep changing daily.