Venezuela: Bad Policies To Remedy A Failing Economy

Things have been difficult for the people of Venezuela who are struggling with inflation that's allegedly up over 4000% in the country.

In 2017 alone, it's estimated that the Bolivar lost roughly 96 percent of its value. Compare that to the US dollar which has lost allegedly the same value since 1913, but they've lost it in only a years time.

The hyperinflation that Venezuela has been facing has been making daily life harder for millions of people in the country. And economists have suggested that in the past few months, that the nation has been in the final stages of a death spiral, with many wondering how much longer it might be able to maintain things.

The economic struggles that the people in the country are facing has prompted them to take to the streets on a number of occasions, protesting for some sort of solution.

Hundreds of thousands of protesters have gone on the streets over the past year or more, holding signs calling the current leader a dictator and many shouting for his removal.

Current leaders continue to assert the narrative that the current troubles are the result of an economic war being waged on the country by Washington. It's all just a grand conspiracy, with Venezuela being the victim-including the government-and surely none of the current problems are due in any part to the decisions that their government has made in their time spent ruling over the masses.

Tens of thousands of Venezuelans have sought asylum in the US and elsewhere around the globe since things have been getting steadily worse in the nation.

And a great deal of private charities and private families etc have been getting involved to try and meet the need of those in the country who are in grave need of food and other daily supplies. People in the country sometimes have to line-up for 10 hours or more to get into a food market and there are incredibly limited supplies when they do. A great deal of people there are going hungry and struggling to even survive.

Hundreds of them allegedly protested on the streets just recently, in the capital Caracas. They were voicing their discontent with shortages of Pork products that they are used to including with their traditional holiday meals. The government promised them subsidized pork but they didn't deliver. The outburst of protests prompted confrontation between the people and the state, with one soldier who ended up being arrested for allegedly having killed a pregnant woman who was in line for food. Maduro blamed the shortage of pork on Portugal.

One idea that the government has come up with to try and resolve their debt issues is to introduce a new cryptocurrency that's known as the Petro. They intend to back that currency with over 5 billion barrels of oil and they hope that it'll be enough to offset their economic woes. While trying to toss that idea around as a solution on the one hand, with the other they've come up with the idea to once again hike the minimum wage, this time about 40 percent.

That is just the sort of move that many believe will push the country into a faster and even worse economic crisis. Why is it a foolish move? Because raising the minimum wage will provide no relief to the citizens. The economic problems that they are facing right now have nothing to do with employers simply underpaying their workers. When inflation reaches the level it’s at right now, it becomes extremely hard to even gauge something like employee performance and the appropriate wage rate. Negotiating any kind of financial contract also becomes severely hampered when inflation is ripping the purchasing power away aggressively.

The root of the problem is inflation caused by a state monopoly on the production of money. Reactionary policies like these are meager attempts for politicians to pretend that they care about solving the problems, when they’re monetary policies are what caused so much economic turmoil in the first place. But of course we won't hear Maduro take any sort of responsibility anytime soon, they never do, it's the blame game until the end. And it's the fault of every and anyone else but their own.

Some don't believe that the Petro currency is going to be the right solution to help solve the problems, so it will be interesting to see how that unfolds and whether or not it helps to make things better. According to the communications minister, Jorge Rodriguez, a great deal of miners have already lined up to take part in the project and they have full confidence that this is the solution they've been waiting for.

Pics:
Federico Parra/AFP/Getty Images via The Guardian
Simpsons via Giphy
Giphy
via EPA / NewsWireNow
via EPA/ NewsWireNow

Sources:
http://www.cnn.com/2017/12/28/americas/venezuela-portugal-christmas-sabotage/index.html
https://oilprice.com/Energy/Crude-Oil/Venezuela-To-Launch-Oil-Backed-Petro-Cryptocurrency-Within-Days.html
https://www.theguardian.com/commentisfree/2016/may/19/venezuela-nicolas-maduro-hugo-chavez-chaos
https://www.cnbc.com/2017/12/29/venezuela-oil-backed-cryptocurrency-to-launch-in-days.html
http://www.smh.com.au/world/venezuelas-own-bitcoinlike-cryptocurrency-will-be-ready-within-days-government-20171229-h0bap7.html
https://www.cnbc.com/2017/12/29/venezuela-oil-backed-cryptocurrency-to-launch-in-days.html
http://www.independent.co.uk/news/world/americas/venezuela-inflation-minimum-wage-increase-president-nicolas-maduro-economic-crisis-a8137056.html
http://en.brinkwire.com/57323/venezuelans-protest-over-pork-shortage-maduro-blames-portugal/
https://www.nytimes.com/interactive/2017/12/17/world/americas/venezuela-children-starving.html
http://newswirenow.co.uk/2018/01/01/venezuelan-soldier-arrested-for-killing-pregnant-woman-on-christmas-eve/

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