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Venezuela on Brink of Hyperinflation

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Re: Venezuela on Brink of Hyperinflation

#51

Post by climber_mac »

pitiburi wrote: post #13
Bonsanto wrote: post #9

Earlier quoted context omitted.

I live in Venezuela and item's prices are raising horrible, let me tell you something I am electrical engineer and computer engineer, and my salary is only 10.3$/month, ridiculous, but his is how socialism works everyone are equalized but to poverty. To buy a car in Venezuela you need to save money for 50 years without buying food supplies, to buy a house it takes 200 years, to buy dollars you need to be a friend of…

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.

I am also from Venezuela. He is not lying. He calculated his salary using the black market price of a dollar: 630 bolivares. He earns close to 7000 bolivares, which is minimum wage.

"Working with some guys there" is not as reliable a source as a guy who actually lives and works in the country. You shouldn't have called him a lier.

Re: Venezuela on Brink of Hyperinflation

#52

Post by kryptiskt »

loblollyboy wrote: post #15
Bonsanto wrote: post #9

Earlier quoted context omitted.

I live in Venezuela and item's prices are raising horrible, let me tell you something I am electrical engineer and computer engineer, and my salary is only 10.3$/month, ridiculous, but his is how socialism works everyone are equalized but to poverty. To buy a car in Venezuela you need to save money for 50 years without buying food supplies, to buy a house it takes 200 years, to buy dollars you need to be a friend of…

seems to work just fine in scandinavia

All the countries in Scandinavia are capitalistic. There is welfare, yes, but you'll find less government involvement in the economy than in the US (example: the US government rescued GM, the Swedish government told SAAB Automobile to take a hike).

Re: Venezuela on Brink of Hyperinflation

#53

Post by yongjik »

xienze wrote: post #37
Al-Khwarizmi wrote: post #26

Earlier quoted context omitted.

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.

> I don't think that's so clear. Yes, it is clear. When you have a system in place that is predicated on having enough productive citizens to support the non-productive ones and your birth rates have fallen off a cliff you're in for trouble. > Free market capitalism has its own problems and its flagship country, the US, is increasingly considered to be in decline. Never said the US doesn't have problems. Just pointin…

Quite to the contrary, when you have a system where "non-productive" citizens are not supported, you stifle innovation, because people don't (can't) take chances when one misstep will lead them into inescapable poverty.

Inefficiencies develop across the system because people can't afford to make a change. Firing people or shutting down a factory becomes a massive struggle of life and death, frequently with literal deaths. (If unemployment means your family's livelihood is at stake, you wouldn't just walk away, would you?)

Source: grew up in a country like that.

Re: Venezuela on Brink of Hyperinflation

#54

Post by xienze »

Al-Khwarizmi wrote: post #49
xienze wrote: post #37

Earlier quoted context omitted.

> I don't think that's so clear. Yes, it is clear. When you have a system in place that is predicated on having enough productive citizens to support the non-productive ones and your birth rates have fallen off a cliff you're in for trouble. > Free market capitalism has its own problems and its flagship country, the US, is increasingly considered to be in decline. Never said the US doesn't have problems. Just pointin…

> When you have a system in place that is predicated on having enough productive citizens to support the non-productive ones and your birth rates have fallen off a cliff you're in for trouble. Every country with falling birth rates has that problem, regardless of the political/economic system. Barring extremist solutions like euthanasia, you need to support non-productive citizens and the resources for it need to com…

> Barring extremist solutions like euthanasia, you need to support non-productive citizens and the resources for it need to come from productive citizens in some way, be it with government intervention or not.

Agreed with the first point. Ultimately though, if you can't generate enough revenue to support the social safety nets something has to give (the old Thatcher quote "socialism works until you run out of other people's money to spend" applies here). The problem with incredibly generous (read: expensive) social programs like Scandinavian countries offer is that the day of reckoning will come much sooner.

Re: Venezuela on Brink of Hyperinflation

#55

Post by pas »

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.

No.

The Fed conducts open market operations, and buys treasury bonds on the open market, directly. Because the goal is to keep the sovereign bond yields low. (To steer investors toward riskier investments with higher returns/yields.) So they basically buy up assets (return producing things) for cash (which loses value with inflation).

They then sit on the assets. (People say it's on their balance sheet, and that's why it's sort of an expansionary monetary policy, because it expands the central bank's balance sheet.) That's why it's not free money to the Government. (Whereas in Venezuela, the Government directly prints money for itself to pay wages and utility bills. Basically seigniorage.)

Re: Venezuela on Brink of Hyperinflation

#56

Post by pas »

dageshi wrote: post #35
tomp wrote: post #21

Earlier quoted context omitted.

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, eventually the central bank will be repaid the dollars it spent, the money spent and injected into the economy will be withdrawn as QE winds down. Assuming QE ever ends of course.

US QE has ended as far as I know. (https://en.wikipedia.org/wiki/Quantitative_easing#US_QE1.2C_...)

The purchased assets (treasury bonds and so on) are idling on the Fed's balance sheet. Eventually as bonds mature the Fed just cancels the newly-created-debt it used to buy the bond, and the asset just disappears from the balance sheet.

Re: Venezuela on Brink of Hyperinflation

#58

Post by pas »

rukittenme wrote: post #30
tomp wrote: post #21

Earlier quoted context omitted.

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.

Well, yes and no. The money goes to bondholders, and whoever held the assets the Fed purchased. Basically investors.

The important thing to notice is that this is all a marginal effect. The Fed bought stuff already on the market, so the asset holders already wanted to liquidate those assets, but with the Fed entering the market and driving [bond] prices up (thus keeping [bond] yields down) investors can't just roll over the money, and other investors are discouraged to invest into low-yield assets, thus they try to invest into other stuff, bonds of riskier companies, foreign markets! (The QE programs drove yields down all across the globe, foreign currencies up http://www.bloomberg.com/news/articles/2015-01-23/rupiah-phi... and as a QE program ended this caused problems http://www.reuters.com/article/2013/08/19/us-india-markets-r..., because governments - just like in pre-2008 - saw cheap loans and went to town.)

So, all in all, money goes where the investor things it'll grow best (low righ and high yield). Real estate was that after 2000, nowadays it's all over the place. (RE is picking up again, look at the insane prices in SF and London; VCs pour billions into emerging sectors - look at the valuations here on HN; and naturally people look for riskier things, abroad, which is good for the global economy.)

Re: Venezuela on Brink of Hyperinflation

#59

Post by BurningFrog »

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 first thing to look for is magnitude. Venezuela probably prints vastly more money, in relation to the entire money supply.

"He who refuses to do arithmetic is doomed to talk nonsense." --- John McCarthy

Re: Venezuela on Brink of Hyperinflation

#60

Post by ced »

climber_mac wrote: post #50
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.

I am also from Venezuela. He is not lying. He calculated his salary using the black market price of a dollar: 630 bolivares. He earns close to 7000 bolivares, which is minimum wage. "Working with some guys there" is not as reliable a source as a guy who actually lives and works in the country. You shouldn't have called him a lier.

Is it common for engineers to earn minimum wage?
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