Venezuela's inflation hits more than 40,000% as everyone dumps its currency 'like a hot potato'

6/30/18
Venezuela's inflation rate has hit a new high, according to university research, with consumer prices in the crisis-ridden country rising by more than 40,000% annually for the first time on record. Steve H. Hanke, an applied economics professor at Johns Hopkins University, told Business Insider on Friday that annual inflation in the country has risen as high as 41,838%. Hanke, who calculated the inflation figure, has tracked prices in the country for more than two decades. Venezuela's government has largely stopped reporting economic data, including internal measures of inflation. The Central Bank of Venezuela, which did not immediately respond to request for comment, has not independently released inflation figures in at least a year. Venezuelan President Nicolas Maduro has passed blame for the roiled economy onto others, including opposition activists and officials in Washington. At a campaign rally in May, he blamed hyperinflation on "criminal mafias." But economists point out that Maduro runs the unorthodox policies they say have pushed the country into economic crisis. The socialist leader has repeatedly refused international aid to Venezuela. "It's internal," Hanke said. "Government spending continues to accelerate and the sources of revenue start drying up."

The government has defaulted on a majority of their outstanding bonds, which economists estimate add up to about $60 billion. Foreign exchange reserves have fallen by about $2.5 billion in the last three months, according to analysis by Capital Economics. As state-run oil industry PDVSA falls apart, economists say a rise in global oil prices is adding to the pain. Production at PDVSA — which accounts for 95% of export earnings in the country and a quarter of gross domestic product — was cut in half from January 2016 to January 2018, according to the US Energy Information Administration. And as the crisis deepens, operations are continuing to wane. Those conditions, Hanke said, have all but killed investor sentiment. Maduro tripled wages earlier in June to 3 million bolivars per month, which Reuters reported at the time was equal to just more than a dollar at the black-market exchange rate. When asked if the wage increase might improve living conditions in Venezuela, Hanke replied: "No, it's a joke. Hardly a drop in the bucket."

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ecofarm said:

Selling gas domestically at $.02/gallon sure made Chavez popular.

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Rogue Valley said:

Now one needs a suitcase full of bolívar's to buy a candy bar ... that is, if one can locate a candy bar for sale.

40,000% (truly runaway) inflation is unsustainable can't continue on. The everyday pressures on people just to survive must be tremendous and debilitating.

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Rogue Valley said:

Now one needs a suitcase full of bolívar's to buy a candy bar ... that is, if one can locate a candy bar for sale.

40,000% (truly runaway) inflation is unsustainable can't continue on. The everyday pressures on people just to survive must be tremendous and debilitating.

Click to expand...

Rogue Valley said:

Venezuela's inflation hits more than 40,000% as everyone dumps its currency 'like a hot potato'

Venezuela's President Nicolas Maduro gestures as he speaks during a ceremony to mark the opening of the judicial
year at the Supreme Court of Justice in Caracas, Venezuela



This is what happens when a dysfunctional government is in power without any meaningful checks and balances. Senior military officers are part and parcel of the Maduro regime and are provided with everything they need. However, there is growing discontent among the junior officer corps. A military coup before the end of 2018 is entirely possible. Either that, or total desperation and social anarchy will finish tearing the country apart.

Related: Venezuela's inflation rate tops 40,000 per cent for first time ever

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Rogue Valley said:

Now one needs a suitcase full of bolívar's to buy a candy bar ... that is, if one can locate a candy bar for sale.

40,000% (truly runaway) inflation is unsustainable can't continue on. The everyday pressures on people just to survive must be tremendous and debilitating.

Click to expand...

Plagued by mismanagement, corruption, and most recently a lack of investment money under the double weight of U.S. sanctions and lower oil prices, PDVSA has seen its production plummet over the last couple of years. S&P Platts estimates this plunge has wiped out as much as 900,000 bpd from the company’s daily production, with the latest daily average standing at 1.41 million bpd in April.

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Meanwhile, collapsing Venezuela has reportedly offered India a 30-per cent discount on crude oil purchases, but only if India agrees to pay in El Petro. India doesn’t plan to use Venezuela’s ‘petro’ cryptocurrency to pay for crude oil imports from the Latin American nation, Indian Foreign Minister Sushma Swaraj said earlier this week.

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chuckiechan said:

I hope the Democrats are paying attention. Jumping on the socialist bandwagon is certainly an ‘iffy’ tactic for 2020, and suicide for 2024.

I guess they every right to come here as refugees.

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