Venezuela is blessed with magnificent natural resources and great promise, but thanks to chavismo, the reality-challenged socialist system imposed upon it by the late egomaniac Hugo Chávez and his torpid successor, former bus driver Nicolás Maduro, it has recently become, as we saw yesterday, the worst economy on earth. Inflation is so high, as Kejal Vyas reported on February 3 in the Wall Street Journal, that the government has been shipping in planeloads of newly printed money – at least five billion bank notes in all. The demand for more bolivars has been so urgent that the Venezuelan government has been forced to split the print job among several major international firms – including a subsidiary of Giesecke & Devrient, “which printed currency in 1920s Weimar Germany, when citizens hauled wheelbarrows of cash to buy bread.” In an unsettling echo of those days, Venezuelans are now carrying around giant rolls of cash, with supper at a fine restaurant costing “a brick-size stack of bills.”
Venezuela’s currency was already close to worthless; this influx of fresh bolivars is virtually guaranteed to reduce the value of the bills even further, increasing inflation (which is already expected to hit 720% this year, currently the highest rate on earth) and sending Venezuela’s economy totally down the tubes. As of early February, the bolivar, which seven years ago was worth about fifty cents, had dropped to a tenth of a penny on the black market. “The flood of money has led some sectors of the economy,” notes Vyas, “to effectively price their goods in U.S. dollars,” in violation of Venezuelan law. Even criminals have switched to greenbacks, with “professional kidnap-and-ransom teams often demand[ing] U.S. currency instead of bolivars.”
CNN’s Patrick Gillespie, in another February 3 report, threw in an additional tidbit. How screwed up is Venezuela? So screwed up that although it has 298 billion barrels of proven oil reserves, more than Saudi Arabia or Iran and eight times the reserves held by the U.S., the country is now importing oil. Its oil sector is so incompetently run that it’s not capable of profitably refining its own crude So it’s been shipping in oil from Russia, Angola, Nigeria, and the U.S.
Is Maduro taking urgent action to pull his country up out of its economic nightmare? Of course not. That would mean recognizing the folly of the current economic policies. And for the true believer in the Bolivarian Revolution, that’s simply not an option. Better to betray the people than abandon chavismo. Better to blame Venezuela’s economic woes on capitalist conspiracy, presumably masterminded by the U.S., than to acknowledge that socialism is a formula for self-destruction.
Thus Maduro “has changed the law so the opposition-controlled National Assembly can’t remove the central bank governor or appoint a new one.” Also, he’s “picked someone who doesn’t even believe there’s such a thing as inflation to be the country’s economic czar.” How can this be? How can someone not believe in inflation? According to this new “czar,” when prices go up, it’s not inflation; it’s profiteering by “parasitic” businesses.
In short, the Venezuelan people are at the mercy of rulers whose devotion to chavista thought compels them to deny the basic laws of economics. For them, ideology trumps reality. Better a mind crammed with utopian ideas than a full stomach.