TJF writes:
If it’s not economic warfare, then what the Hell is causing the shortages?
http://www.tradingeconomics.com/venezuela/inflation-cpi
When a country’s inflation rate exceeds certain levels, especially in Venezuela’s case where they have to import food and a substantial number of goods, economic systems start breaking down. The country went from 50% inflation in early 2014 to 180% last year with expectations of 500% this year, indicating that prices double every 2 months. With such high inflation no one wants to accept the currency for any sort of goods, services, or wages. Of course one could easily argue that economic warfare is the cause of the inflation, I know little of Venezuela beyond what I have read in the conventional press.
1.The mass shortages are causing a lot of the inflation obviously. Supply and demand.
2. But most of the inflation is being caused by the unequal exchange rate. 1 government dollar = 40 black market dollars.
3. Lots of people are making plenty of money in Venezuela. The business sector is not going out of business or anything like that. When they sell products on the black market and smuggle them to Colombia, they make huge profits. Also a lot of them are playing the currency markets where they get a government dollar for 1$ that is worth at least $40 on the black market. The wildly inflated dollars on the black market are causing a lot of the inflation right there. The inflation is coming right out of that black market in dollars.
The stores in the rich areas are stocked to the rafters. They have no shortages of anything. All of the shortages are in the poorer or working class areas. The rich are not suffering at all. They can buy anything they want.
There is still a huge amount of capital flight going on. ~$50 billion dollars goes out of the country every year due to capital flight.
