Venezuela’s Inflation Expected to Hit 1 Million Percent by the End of the Year
Venezuela has collapsed, it does not exist in its previous form. And just when you think matters couldn’t get worse in the socialist country, they do. This is what collapse looks like.
The dire state in Venezuela has morphed into not only an economic but also a political and humanitarian crisis. The living conditions in the country have gradually become more disastrous. Grocery stores are empty and businesses and factories have had to close down. 90 percent of Venezuelans don’t have enough money to purchase food.
Now, the International Monetary Fund (IMF) is predicting that the inflation in the country will hit 1 million percent by the end of 2018.
“The collapse in economic activity, hyperinflation, and increasing deterioration in the provision of public goods as well as shortages of food at subsidized prices have resulted in large migration flows, which will lead to intensifying spillover effects on neighboring countries,” said Alejandro Werner, head of the IMF’s Western Hemisphere department in a blog post.
To put things in perspective, a cup of coffee served at a bakery in eastern Caracas saw an inflation rate of 300,000 percent in the last three months, according to data from the Bloomberg Cafe Con Leche Index.
The economy in Venezuela, which used to be rich in oil profits, has been depleted by 50 percent in just the last five years.
“The IMF estimates Venezuela’s economy could contract 18% this year, up from the 15% drop it predicted in April. This will be the third consecutive year of double-digit decline, the IMF said,” writes The Guardian.
But the state of the economy is so uncertain, it’s difficult to predict the future.
“An economy throwing you these numbers is very difficult to project,” said Werner. “Any changes between now and December may include significant changes.”
President Nicolás Maduro, who recently won a second six-year term, only has about a 22 percent approval rating. He remains in power by using fear tactics and by controlling voters with the limited food supply, while also barring opposition candidates from running against him in elections.
Maduro continues to lead the country with socialist policies, which the majority of Venezuelans believe have created this dire situation for Venezuelans.
Instead, Maduro blames his political opponents for the country’s economic crisis.
“While hundreds of thousands of Venezuelans flee hunger and surging prices, President Nicolas Maduro has maintained that the crisis is a result of an “economic war” waged by his political opponents at home and abroad. As the economy unraveled, authorities stopped regularly publishing economic indicators. Economists now rely on independent estimates provided by international organizations, banks, and even Venezuela’s congress to track the country’s economic meltdown,” writes Bloomberg.
Author’s note: Again, we aren’t surprised by this massive inflation spike. This is what socialism does. Socialism fosters an environment without any incentives to produce, so then all the products get more expensive. Then the socialist benefits from the government become less valuable and are eventually destroyed by an increase of inflation. Socialism backfires every time.
Editor’s note: This is the most brutal form of collapse in a socialist state. Salaries are worthless, people are starving, production is falling to zero. The smart people are working in dollars or cryptocurrency.