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Venezuela on Brink of Hyperinflation

economist.com

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Re: Venezuela on Brink of Hyperinflation

#21

Post by tomp »

rukittenme wrote: post #14
tomp wrote: post #12

I wonder why there's inflation in Venezuela, and not e.g. in the EU or the US. In particular, how is the printing of money by Venezuela different from the printing that goes on in the West (Quantitative Easing). I guess the only difference is that in the West, the money goes mostly to the banks, which distribute it to the companies or invest it in the stock market and real estate. Consequently, the rich get richer an…

The Fed doesn't "give" money to anyone. They buy treasury bonds from the US government.

You mean, instead of giving the government money directly, there's an extra step whereby the government issues bonds and the central bank buys them?

Re: Venezuela on Brink of Hyperinflation

#22

Post by jabgrabdthrow »

rukittenme wrote: post #14
tomp wrote: post #12

I wonder why there's inflation in Venezuela, and not e.g. in the EU or the US. In particular, how is the printing of money by Venezuela different from the printing that goes on in the West (Quantitative Easing). I guess the only difference is that in the West, the money goes mostly to the banks, which distribute it to the companies or invest it in the stock market and real estate. Consequently, the rich get richer an…

The Fed doesn't "give" money to anyone. They buy treasury bonds from the US government.

The fed "gives" the proceeds of the monopoly on taxation, which is the only backing bonds have. Some people like to call this "free" because anyone could trivially use it to create value for themselves.

Re: Venezuela on Brink of Hyperinflation

#25

Post by chvid »

kordless wrote: post #16
pitiburi wrote: post #13

Earlier quoted context omitted.

I am not in Venezuela, but I work with some guys there. Your "10.3$/month" is a blatant, and pretty absurd lie. If this account created a few minutes ago is going to be used to spread lies, please use it somewhere else, not in HN. We don't need you.

> We don't need you. Don't speak for me. Given at least half of us have no idea what 10.3$/month is, why don't one of you enlighten us and let us draw our own conclusions?

My guess is the poster is referring to the monthly wage of a professional in Venezuela in USD by the black market rate which probably is fairly indicative of the purchasing power.

And yes. Venezuela is a touchy subject since its nasty regime sadly is idolized by many left-winged intellectuals in the west.

Re: Venezuela on Brink of Hyperinflation

#26

Post by Al-Khwarizmi »

xienze wrote: post #17
loblollyboy wrote: post #15

Earlier quoted context omitted.

seems to work just fine in scandinavia

It always works until it doesn't. Sweden will have a particularly tough time in coming years.

I don't think that's so clear. But even if it's true, "works until it doesn't" is probably the best thing that can be said of any political/economic system to date. Free market capitalism has its own problems and its flagship country, the US, is increasingly considered to be in decline.

Re: Venezuela on Brink of Hyperinflation

#28

Post by bmelton »

kordless wrote: post #16
pitiburi wrote: post #13

Earlier quoted context omitted.

I am not in Venezuela, but I work with some guys there. Your "10.3$/month" is a blatant, and pretty absurd lie. If this account created a few minutes ago is going to be used to spread lies, please use it somewhere else, not in HN. We don't need you.

> We don't need you. Don't speak for me. Given at least half of us have no idea what 10.3$/month is, why don't one of you enlighten us and let us draw our own conclusions?

So, I'll freely concede that I'm ignorant on the issue, but Bonsanto made an extraordinary claim below (that government forbids buying non-Venezuelan currency) that despite my initial idea, turns out to appear truthful.

So, According to this somewhat recent article by Bloomberg[1], "A school teacher with 25 years of experience made 9,786 bolivars a month in 2014. That's about $35 a month at the current black market exchange rate, which won't even buy a used television."

It's hard to tell what the actual exchange rate of the bolivar is to the dollar, because apparently Venezuela fixes the exchange rate, so while it's been steady on paper, it appears that in practice, its actual exchange rate is approximately 100 times less than the official exchange rate. The official rate indicates that 1 bolivar == .16 US dollar, but other sources indicate that the effective, actual rate in Venezuela is more like 1 boliver == .0036 US dollars (or, because my simple math skills are horrible, 100 bolivar == 36 US cents.)

If that's the case, and I'm not missing something crazy, it doesn't seem far-fetched to me at all that an electrical engineer would be earning the American equivalent of $10.3 US dollars per month, depending on how you define the exchange rate.

[1] - http://www.bloomberg.com/news/articles/2015-03-06/monthly-sa...

Re: Venezuela on Brink of Hyperinflation

#29

Post by aortega »

tomp wrote: post #12

I wonder why there's inflation in Venezuela, and not e.g. in the EU or the US. In particular, how is the printing of money by Venezuela different from the printing that goes on in the West (Quantitative Easing). I guess the only difference is that in the West, the money goes mostly to the banks, which distribute it to the companies or invest it in the stock market and real estate. Consequently, the rich get richer an…

>how is the printing of money by Venezuela different from the printing that goes on in the West

In the west you produce things, so you need to print money to buy those things, or money would depreciate.

In third-world countries like Venezuela the gov needs money, so he prints a lot of it. There are no new things. Nothing get produced or imported, so you have a lot more money for the same things. Thats inflation.

Re: Venezuela on Brink of Hyperinflation

#30

Post by rukittenme »

tomp wrote: post #21
rukittenme wrote: post #14

Earlier quoted context omitted.

The Fed doesn't "give" money to anyone. They buy treasury bonds from the US government.

You mean, instead of giving the government money directly, there's an extra step whereby the government issues bonds and the central bank buys them?

Yes. The money doesn't go to banks or stocks or real estate.
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