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Venezuela has the most Millionaires but they are broke

ludin said:
Hyperinflation renders Venezuela a nation of broke millionaires | Fox News

as you can see just printing money doesn't solve anything.
as Venezuela has tried to combat their hyper-inflation by just printing more money.

they have notes up to 20k bolivars.
while some people are walking around with a 1m bolivars it only amounts to about 300 US dollars.
Click to expand...
The only exception would be if you had a mortgage on you home in which you borrowed 500,000 bolivars,
you could pay off your mortgage with what was in your wallet.
 
Its worse than that. Venezuella's central planners thought that the best way to make up for the lack of revenue due to falling oil prices was to start printing money because the face value of the currency at the time was still higher than the cost to print that currency.

The govt prints away and makes a little profit to boot.

Its called " seigniorage " and no Govt would be IDIOTIC enough to try it.

Well, except for the Socialist central planners of Venezuela.
 
longview said:
The only exception would be if you had a mortgage on you home in which you borrowed 500,000 bolivars,
you could pay off your mortgage with what was in your wallet.
Click to expand...

yep but I see everything adjusting in price value. so that 500k bolivar was the value now it is 1600% higher.
 
Fenton said:
Its worse than that. Venezuella's central planners thought that the best way to make up for the lack of revenue due to falling oil prices was to start printing money because the face value of the currency at the time was still higher than the cost to print that currency.

The govt prints away and makes a little profit to boot.

Its called " seigniorage " and no Govt would be IDIOTIC enough to try it.

Well, except for the Socialist central planners of Venezuela.
Click to expand...

MMT at it's worst they can never go broke as long as they print their own money.
 
ludin said:
yep but I see everything adjusting in price value. so that 500k bolivar was the value now it is 1600% higher.
Click to expand...
Unless they slid up the amount owed, that would stay the same.
If it was government adjusted value it could be different.
 
longview said:
Unless they slid up the amount owed, that would stay the same.
If it was government adjusted value it could be different.
Click to expand...

you want to see how devalued the banking system would come if they allowed that?
the bank would go broke.
 
ludin said:
Hyperinflation renders Venezuela a nation of broke millionaires | Fox News

as you can see just printing money doesn't solve anything.
as Venezuela has tried to combat their hyper-inflation by just printing more money.

they have notes up to 20k bolivars.
while some people are walking around with a 1m bolivars it only amounts to about 300 US dollars.
Click to expand...

I don't think anyone disputes the point that totalitarian governments with a strict socialist economy inevitably fail, except the people in charge of said governments.

The only reason China is a contender these days is that they were smart enough to loosen up on both fronts, just enough...




This thread is in a subforum of US politics, not International Politics. What on Earth do you think the Venezuelan government has to do with the US government? What on Earth do you think the Venezuelan economy has to do with the US economy?
)
 
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ludin said:
MMT at it's worst they can never go broke as long as they print their own money.
Click to expand...

If you had bothered to go into Venezuela's situation more than skin deep, you might have a good thread on your hands. Instead, it is destined to become yet another instance of people who know very little about the subject all coming to a quick agreement on the wrong answer.
 
JohnfrmClevelan said:
If you had bothered to go into Venezuela's situation more than skin deep, you might have a good thread on your hands. Instead, it is destined to become yet another instance of people who know very little about the subject all coming to a quick agreement on the wrong answer.
Click to expand...

And yet you haven't even provided that, a " skin deep " explanation of why Venezuela is and has been experiencing hyperinlfation. So whats stopping you ?

Im sure their central planners knew exactly what they were doing right before they plunged their currency into ruin.
Just like all of the arm chair economist here who persist on pushing ridiculous MMT theory as if it was useful in any way.
 
Visbek said:
Uncontrolled printing of money, which is used to pay for government services, creates hyperinflation. We've known this for decades, if not longer.

Is this concept new to you?
Click to expand...

There's a bit more to it then that. I guess " seigniorage " is a new concept to you
 
Fenton said:
And yet you haven't even provided that, a " skin deep " explanation of why Venezuela is and has been experiencing hyperinlfation. So whats stopping you ?
Click to expand...

The lack of an audience capable of understanding the explanation.
 
ludin said:
you want to see how devalued the banking system would come if they allowed that?
the bank would go broke.
Click to expand...
It has no bearing, suppose in the US you borrowed $200 K for a mortgage, and then we went through several years of high inflation.
Should the amount on your mortgage increase? no of course not!
This happened to many people(and banks) in the late 70's, although the amounts were lower, the concept was the same.
 
Visbek said:
Uncontrolled printing of money, which is used to pay for government services, creates hyperinflation. We've known this for decades, if not longer.

Is this concept new to you?
Click to expand...

I guess you don't realize the concept of MMT.
government can never go broke because it can print it's own money.
While yes the government can print it's own money printing money to just print money
has consequences


This is an example of MMT going down in burning flames which is why NO country uses that as a monetary policy.
 
longview said:
It has no bearing, suppose in the US you borrowed $200 K for a mortgage, and then we went through several years of high inflation.
Should the amount on your mortgage increase? no of course not!
This happened to many people(and banks) in the late 70's, although the amounts were lower, the concept was the same.
Click to expand...

yea but this is a bit different. it isn't like in the 1970's the US government made the 1 dollar bill 100 dollars.
that is what they did in VZ.

I agree with what you said though.
 
ludin said:
yea but this is a bit different. it isn't like in the 1970's the US government made the 1 dollar bill 100 dollars.
that is what they did in VZ.

I agree with what you said though.
Click to expand...
I think you may be right, if the Government changed the value of everything then the change would apply everywhere,
normal inflation is not like that.
 
longview said:
I think you may be right, if the Government changed the value of everything then the change would apply everywhere,
normal inflation is not like that.
Click to expand...

Right the VZ government is issuing 20k nominal bills.
in fact they issued 6 new bills ranging from 500-20k.

which is similar to what happened in Zimbabwe I think it was.
they were issuing 100k bills, to bad a thing of egg's cost you 500k.

by issuing larger denominations of money the banks would have to compensate the price of your home or mortgage to match
the new rate. otherwise you are getting your home for like 1/4 or less of what you paid for it.

so for example say you have a mortgage for 100k.
right now (just for simplicity sakes it takes 100k one dollar bills).

something like that happens in the US and instead of the base being 1 dollar the US government start issuing 10k dollar bills.
now all you need is 10 10k bills to pay off your home.

but that is when your home was under 1 dollar. the bank would have to adjust your mortgage. to match the new currency rates.

this isn't normal inflation this is hyperinflation. VZ is facing a 1600% increase in their inflation rate.
 
Mr Person said:
I don't think anyone disputes the point that totalitarian governments with a strict socialist economy inevitably fail, except the people in charge of said governments.
Click to expand...

They don't dispute it after they inevitably fail. But before they do, socialist totalitarians tend to get a lot of applause.
 
ludin said:
Right the VZ government is issuing 20k nominal bills.
in fact they issued 6 new bills ranging from 500-20k.

which is similar to what happened in Zimbabwe I think it was.
they were issuing 100k bills, to bad a thing of egg's cost you 500k.

by issuing larger denominations of money the banks would have to compensate the price of your home or mortgage to match
the new rate. otherwise you are getting your home for like 1/4 or less of what you paid for it.

so for example say you have a mortgage for 100k.
right now (just for simplicity sakes it takes 100k one dollar bills).

something like that happens in the US and instead of the base being 1 dollar the US government start issuing 10k dollar bills.
now all you need is 10 10k bills to pay off your home.

but that is when your home was under 1 dollar. the bank would have to adjust your mortgage. to match the new currency rates.

this isn't normal inflation this is hyperinflation. VZ is facing a 1600% increase in their inflation rate.
Click to expand...

Yes, of course! You have cracked the problem of hyperinflation! Governments just up and decide to print up tons of large denominations out of the blue. That's what makes prices go up in the first place - lots and lots of money, not other things.

Further, you have also debunked MMT in the process! I was so wrong all this time, thinking economics was about production and trade, when it was all about how many dollars the government decided to print up.

Thanks for opening up my eyes with such a straightforward dissection of the Venezuelan economic problem, Ludin. I owe you a great debt.
 
ludin said:
I guess you don't realize the concept of MMT.
Click to expand...
MMT doesn't say "you can print indefinitely without causing hyperinflation."

MMT says "the government can't become insolvent, because it owns the printing press."

It's not clear if it's worse to default, or to print out of massive sovereign debt; that could depend greatly upon the circumstances. E.g. it might be better for the US to print up billions and pay off debtors than to default; it might be worse for Argentina to default than print.

I.e. your comments are not a valid, or remotely serious, criticism of MMT.


This is an example of MMT going down in burning flames which is why NO country uses that as a monetary policy.
Click to expand...
Uh... no.

It's an example of the government of Venezuela destroying its own nation. The mechanism by which it does so really has nothing to do with MMT, as the truth or falsity of the theory has nothing to do with the policies administered by failed states.
 
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