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OFF-TOPIC Venezuela Inflation Rates

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Fox

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So I seen this earlier...

NtxuR6M.jpg

This is how much money you would need to Venezuela to buy that chicken.

14m bolivars for a chicken: Venezuela hyperinflation explained

So I went and punched that into a historical calculator and seen that in 2008 that same amount of money was worth 6.8 million USD.

Screen Shot 2018-08-21 at 16.39.07.png

Can someone explain how it would get so far out of control and how this actually plays out with a persons actual wealth?
 

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lowtek

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So I seen this earlier...

View attachment 21019

This is how much money you would need to Venezuela to buy that chicken.

14m bolivars for a chicken: Venezuela hyperinflation explained

So I went and punched that into a historical calculator and seen that in 2008 that same amount of money was worth 6.8 million USD.

View attachment 21020

Can someone explain how it would get so far out of control and how this actually plays out with a persons actual wealth?
It gets out of control through government intervention in the free market. Everybody knows the government shouldn't set the price of goods, but somehow the price money (i.e. interest rates) is an exception. These same people get surprised when this results in gross distortions and catastrophes (i.e. building millions of excess homes and then a collapse in the housing market).

Essentially the Venezuelan government tried to print their way out of a mess. They had taken ownership of the oil industry, and ran it into the ground. With oil being their only national asset, when the price of oil tanked, so did their economy. They still owe debts, so they do what all banana republics do - inflate the money supply. This increases the velocity of money (people don't want to hold it because it's devaluing so rapidly) and exerts upward pressure on prices. This results in price inflation, and the billion dollar chicken.

The way it plays out on a persons' wealth is devastating. They ate their pets a couple years ago, seriously, and now people are fleeing en masse to Colombia. It's a complete disaster and the only way out is to replace their socialist government with a more capitalist one. It's no coincidence that Chile is thriving while Venezuela is a complete disaster.
 

Agbaya

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The way it plays out on a persons' wealth is devastating. They ate their pets a couple years ago, seriously, and now people are fleeing en masse to Colombia. It's a complete disaster and the only way out is to replace their socialist government with a more capitalist one. It's no coincidence that Chile is thriving while Venezuela is a complete disaster.
How could someone mitigate the risk of having their net-worth destroyed by their print happy government? The only way I see is to have investments from markets all over the world so if one shits the bed like in Venezuela, you won't see the value of your money fade away.
 

lowtek

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How could someone mitigate the risk of having their net-worth destroyed by their print happy government? The only way I see is to have investments from markets all over the world so if one shits the bed like in Venezuela, you won't see the value of your money fade away.
Sure, being invested in foreign markets would hedge your risk if you were a citizen of a non western nation.

For us in the United States or Europe, if we were facing such a collapse, it's game over. If the USD falls, the rest of the world goes with it. There's nowhere to run, in terms of the financial markets. I suppose gold would be your best bet for wealth preservation, but your net worth is the least of your concerns when there is literally no food to purchase.
 

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Stock up on guns, ammo, booze, silver and gold. Keep your pulse on the government and what they are doing. Unless you are in a coma their are probably some signs to watch out for before it takes a wheelbarrow full of cash in order to buy anything.

My desk has 3 bills in a frame on it. A 100 trillion, 50 trillion, a 1 dollar note from Zimbabwe. It is literally just paper printed by a government. The only reason that paper is worth anything is because people have faith in their government. If people start to lose faith in their government on a massive scale, then why do they believe that these colorful pieces of paper will be worth anything?

 
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ygtrhos

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I am Turkish and Turkey has been dealing with hyperinflation since 70s. Even in the boom years, double-digit inflation was a daily reality in Turkey. I can totally follow the Venezuelan thing.

It is expected that the inflation in lira next year is 30-40%. The ones who are screwed are the people with salaries: pensioners, workers (private or government). The ones who profited huge are exporters and the ones who got bankrupt are importers.

We are going to see a lot of inflation in emerging markets, because it is going to be difficult in emerging markets to return the debt in dollars, where there is not much money around anymore, set free by low-interest rate politics in USA (and soon EU as well). Turkey is an extreme example, but Iran is going through a similar process for example.

Times are going to be tough and the ones who adapt to the new economy will survive.
 

Captain_Picard

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wrt Venezuela and Turkey:

Wouldn't Bitcoin solve these problems? Its max supply is 21 million units, but it will never reach that because people lose their coins. No one can print off more Bitcoins at a whim because they want to, at least not faster than the total hashing ability that the mining network will allow. Bitcoin can also transcend countries. One single Bitcoin alone can power the economies of the entire world.
 

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Brad S

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Anyone have any thoughts on whether the original bolivar will ever regain some of its value?

I bought some awhile back very cheaply on the off chance it would ever rebound with the "reversion to mean" law.

Sent from my SM-G950U using Tapatalk
 

happybhoy

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People are struggling to buy fuel because the lowest denomination is far,far higher than the cost.
 

GoGetter24

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Just remember folks: socialism works, until it doesn't work and it's capitalism's fault.

That's literally what Chomsky said after Venezuela collapsed, "it was due to too much capitalism", after lauding their socialist model and being best buddies with Chavez. The guy is a walking caricature. Academic scum.

I had another buddy from back at university who was all on that bandwagon. About Chavez being some kind of socialist hero, standing up to the US. And yet Venezuela, the most oil rich country in the whole region is now a collapsed hellhole. I bet if I still had contact with him, he'd say the same "wasn't socialism's fault" thing. Incidentally he stayed in academia too. Academic scum.

Wouldn't Bitcoin solve these problems?
Sure, if you're "rich" enough to afford a computer and electricity.

Oh and also the 6 month training course to learn what they actually are and how to use them.

Gold & silver were always the solution: for the citizens. Not for the government. You think the government considers this a problem? They get to print that money and use it first. They don't suffer inflation, until people stop accepting anything but USD as payment.

But then they have a traditional government solution: stick a gun in their face.
 

FastNAwesome

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how this actually plays out with a persons actual wealth?
If you had cash in said currency, then it becomes almost worthless. But this also goes for debts in such currency.

How could someone mitigate the risk of having their net-worth destroyed
By not holding it in currency in question.
 

LittleWolfie

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But... But... Socialism works...
Well, socialist Norway has budget surplus and negative government debt, it has more assets in the sovereign wealth fund than in debt liabilities, so could cancel all their debts without printing a single Krona.

Venezuela's third way was modelled after Norway so it's almost a textbook study

wrt Venezuela and Turkey:

Wouldn't Bitcoin solve these problems?
No Bitcoin is technically inflationary,)currently at 3.87% but the fixed supply and further progression means it's way worse than just adopting say the euro or dollar. Plus it's far too volatile, slow to confirm and requires oodles of electricity. That said the fact that it started out at a higher inflationary rate than the Bolivar is close to the ideal rate of 2% and the rate is simply a function of block difficulty (Dodge Coin has a totally different inflation rate) you can start to see the reason for the Venezulan Goverment's interest. A large denomination is just fine, if it can be stabilised, one can just redomniate the notes. Crypto is good as that, but it has the volatility which needs government fiat to overcome.
 

lowtek

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Well, socialist Norway has budget surplus and negative government debt, it has more assets in the sovereign wealth fund than in debt liabilities, so could cancel all their debts without printing a single Krona.

Venezuela's third way was modelled after Norway so it's almost a textbook study



No Bitcoin is technically inflationary,)currently at 3.87% but the fixed supply and further progression means it's way worse than just adopting say the euro or dollar. Plus it's far too volatile, slow to confirm and requires oodles of electricity. That said the fact that it started out at a higher inflationary rate than the Bolivar is close to the ideal rate of 2% and the rate is simply a function of block difficulty (Dodge Coin has a totally different inflation rate) you can start to see the reason for the Venezulan Goverment's interest. A large denomination is just fine, if it can be stabilised, one can just redomniate the notes. Crypto is good as that, but it has the volatility which needs government fiat to overcome.
I was wondering when someone would show up with this propaganda nonsense.

Norway isn't socialist by any stretch of the word. It's a strong capitalist market with a large government player subsidized by huge individual income taxes. They have fewer regulations and lower business taxes than we do here in the States.
 

ChrisR

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I was wondering when someone would show up with this propaganda nonsense.
Haha! It was only a matter of time.


Well, socialist Norway has budget surplus and negative government debt, it has more assets in the sovereign wealth fund than in debt liabilities, so could cancel all their debts without printing a single Krona.

Venezuela's third way was modelled after Norway so it's almost a textbook study
@lowtek is right. Norway isn't a socialist country. Until these "socialist" countries nationalize their means of production they aren't socialist. They're capitalist countries with socialist programs.
 

GoGetter24

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Haha! It was only a matter of time.
Yeah and how surprised I am I had to click "show content from ignored member" to find out who it was.

And low and behold it's our resident pathetic whimpering troll: LittleWolfie. How the eff he's still allowed to stay here and poison this well is beyond me.

Hopefully his government conscripts him and hammers his wet lettuce self into at least 10% of a solid upstanding grown-up man.
 

Xeon

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Does anyone here have manufacturers or have dealings in Venezuela? I was wondering if their manufacturers (in general) there will be even cheaper than the Chinese factories, and it's even faster and cheaper to ship from Venezuela to the US.

Not sure what is their highest performing industries/exports though.
 

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LittleWolfie

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What problems do people have with Crypto? Solve

I was wondering when someone would show up with this propaganda nonsense.

Norway isn't socialist by any stretch of the word.
there's no stretching it fits literally the first definition in the dictionary (of course so does the USA) the closest non socialist example I can think of is lazzie fare capitalism during the early British empire/industrial revolution.


I've added the definition below for clarity.

. It's a strong capitalist market with a large government player subsidized by huge individual income taxes. They have fewer regulations and lower business taxes than we do here in the States.
One can be both capitalist and socialist, in fact that was a major point socialism and capitalism as a bulwark against communism for the average man while retaining most of the advantages of capitalism.

Haha! It was only a matter of time.




@lowtek is right. Norway isn't a socialist country. Until these "socialist" countries nationalize their means of production they aren't socialist. They're capitalist countries with socialist programs.
Haha! It was only a matter of time.




@lowtek is right. Norway isn't a socialist country. Until these "socialist" countries nationalize their means of production they aren't socialist. They're capitalist countries with socialist programs.
The Oxford English Dicitonary gives socialism as 1A political and economic theory of social organization which advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole.

Now how does Norway (or the USA) for that matter not regulate the means of production? True, there's no minimum wage law in Norway, but collective bargaining is community regulation of the means of production, so is health and safety law. Norway is a socialist and a capitalist state with a strong welfare system that's the Nordic model.

Until these "socialist" countries nationalize their means of production they aren't Socialist
Vinmonopolet (English: The Wine Monopoly), symbolized by Ⓥ and colloquially shortened to Polet, is a government-owned alcoholic beverage retailer and the only company allowed to sell beverages containing an alcohol content higher than 4.75% in Norway.[1]

Statskog is a Norwegian state-ownedenterprise responsible for the management of state-owned forest and mountain real estatetotaling approximately 20% of the area of Norway. About 5% of Statskog's land is productive forest while 80% is above the tree line. The company has its headquarters in Namsos.

List of government enterprises of Norway - Wikipedia

Sure they don't own all the means of production but even going by your definition rather than the dictionary one they own it in some areas and even have an exclusive monopoly in the first example, it is illegal to compete with poker. How is that not socialist?
 

Roli

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Sure they don't own all the means of production but even going by your definition rather than the dictionary one they own it in some areas and even have an exclusive monopoly in the first example, it is illegal to compete with poker. How is that not socialist?
I wouldn't bother getting into this, socialism means something else in the US. Because of decades of propaganda they don't understand that it is possible to be capitalist and socialist at the same time. Hence the fastest way to lose an election in the States is to be labelled a socialist (filthy commie).

On another very sad note, in Venezuela the price of condoms has gone up so much that they can no longer be afforded by most people, or given out by sexual health clinics.

This has led to a whole swathe of young women sterilising themselves, because they can not afford to feed any babies they may have.

The knock on effects from this could last decades, from population shrinkage to STDs.

Chavez fooled the world about his efficacy, however it did seem that he was somehow holding the place together. I hope they can come back from this, though at the moment it's hard to see how.
 

kelvinfernandezm

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Just remember folks: socialism works, until it doesn't work and it's capitalism's fault.

That's literally what Chomsky said after Venezuela collapsed, "it was due to too much capitalism", after lauding their socialist model and being best buddies with Chavez. The guy is a walking caricature. Academic scum.

I had another buddy from back at university who was all on that bandwagon. About Chavez being some kind of socialist hero, standing up to the US. And yet Venezuela, the most oil rich country in the whole region is now a collapsed hellhole. I bet if I still had contact with him, he'd say the same "wasn't socialism's fault" thing. Incidentally he stayed in academia too. Academic scum.


Sure, if you're "rich" enough to afford a computer and electricity.

Oh and also the 6 month training course to learn what they actually are and how to use them.

Gold & silver were always the solution: for the citizens. Not for the government. You think the government considers this a problem? They get to print that money and use it first. They don't suffer inflation, until people stop accepting anything but USD as payment.

But then they have a traditional government solution: stick a gun in their face.
wrt Venezuela and Turkey:

Wouldn't Bitcoin solve these problems? Its max supply is 21 million units, but it will never reach that because people lose their coins. No one can print off more Bitcoins at a whim because they want to, at least not faster than the total hashing ability that the mining network will allow. Bitcoin can also transcend countries. One single Bitcoin alone can power the economies of the entire world.
Ever heard of internet cafes? You don't need a computer and electricity inside your house to buy Bitcoin. There's also local bitcoins to buy locally.

And what are you talking about when you say you need a 6 month training course? You can literally buy Bitcoin and use it in less than an hour. I don't think you know what you're talking about about.

And to answer the original question yes Bitcoin has solved the problem for the ones that knew about it. Venezuela was one of the reasons why Bitcoin skyrocketed to 20k last year. Even regular folks were buying bitcoins in paper wallets with Pepe the Frog on it to throw off the police who tried to confiscate their possessions.
 

LittleWolfie

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Venezuela was one of the reasons why Bitcoin skyrocketed to 20k last year. Even regular folks were buying bitcoins in paper wallets with Pepe the Frog on it to throw off the police who tried to confiscate their possessions.
Bitcoin hasn't solved the problem being discussed(of Venezuela economy) at all, sure paper wallets can solve the problem for low electricity and make it harder for others to know what I have, however foreign fiat , gold and silver can solve that too as could bearer bonds.

Who here would recognise a Kenyan 10 00 shilling note? Would you know its value? Can you tell a gold necklace from a

This still leaves the problem of a) getting the hard currency and b) decreasing the inflationary rate in a controlled manner now crypto can potentially solve both of those, but Bitcoin can't.

In the case of providing a tradeable store of value not intercepted by fiat controls then a stable crypto pegged to a good foreign currency or precious metals is a much better option.[/QUOTE]
 
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Roli

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Thanks for the info. What's a good US dictionary?
Not really sure, I think they use Webster's quite a lot. Don't know how good it is though.
 

GoGetter24

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I don't think you know what you're talking about about.
How to guess what percentage of someone's assets are invested in crypto: see how vigorously they claim you "don't know what you're talking about" when you point out nobody actually uses the stuff for day to day transactions.

"I'd like that bread please"
"OK that'll be 100 bolivars"
"Cool, give me your bitcoin address, and I'll go find an internet cafe, and then I'll come back for the bread when the transaction is confirmed".

Dat true believerism.
 

PedroG

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I was wondering when someone would show up with this propaganda nonsense.

Norway isn't socialist by any stretch of the word. It's a strong capitalist market with a large government player subsidized by huge individual income taxes. They have fewer regulations and lower business taxes than we do here in the States.
Yeah, all of a sudden people want to re-define socialism to mean any high tax country, so they can pick any country they want as an example.
 

Longinus

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I wouldn't bother getting into this, socialism means something else in the US.
This.

What is called "socialist" in Europe, can you compare with "liberal" in the US, while "liberal" is considered more conservative here, although there are still many differences.
Socialist political parties have been everywhere in power in Western European countries, with a capitalist fundament that is. Those are still far from what you call a socialist state like Venezuela.
 

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