The problem is the "currency" the worlds been sold into.
Case in point... it takes us all about an average of $2.00 dollars for a gallon of gas. On average right now. Probably more on the coasts.
If I take one of my Morgan silver dollars, and melt it for the silver content I can get as of today roughly 8 gallons and a little more for that one silver dollar.
2 paper, fiat, federal reserve notes for 1 gallon OR 1 Morgan silver dollar for 8+ gallons.
The problem is the currency is worthless. And is inflated away each year to lose more and more value.
So IMO the problem is the currency. It's worthless and bankers are able to devalue it at will.
Which isn't a bad thing for the economy. It is better for it if a person of means lends the money to the government or the private sector, or buys equities or other investments.
Those things contradict It's worthless and bankers are able to devalue it at will.
https://www.reddit.com/r/badeconomics/comments/4y6zgn/gold_s...
Food, medicine, clothes, transportation... Now those are far more inherently useful to a human. Not great mediums for a standard of exchange, however.
It's like people who understand supply and demand short-circuit when they think that the same laws don't apply to money too.
Everyone who understands American economic policy knows that the currency is being slowly devalued on purpose. This is not a conspiracy theory, it is common knowledge. The inflation target is always greater than 0. This is in part because of the perceived risks of deflation -- better to be on one side of the line than the other -- but also, generally, the point is to encourage people to spend or invest rather than passively save, because spending and investment grow the economy.
To a libertarian this is one of the most oppressive things about the way the government works currently ... it forces everyone to work more than they would ideally have to, in a sense. (But I say "in a sense" because if the economy were at a much less active level as "normal" maybe everyone would have lower quality of life. I don't know.) If you ever wondered why Ron Paul dislikes the Fed so much, well, it's because of reasons like this.
Until I pull out a silver quarter or silver dollar and prove to them how much the private federal reserve has devalued their money.
Then it's like, "Oh. Wow. You're right."
If gas stations were willing to barter commodities for gas, you could also provide a pound of shelled walnuts or perhaps 8 oz of fine aged Parmesan cheese.
Why was a Morgan dollar worth a dollar? A: Because congress said so. Just as with paper currency, if the market value is higher, people will hoard it (like Eastern Bloc nations did with dollars back in the Cold War) and if it goes lower, people will discount it.
You can typically keep your savings growing faster than inflation with relatively safe investments.
I'm not going to engage you because I don't even believe in mainstream economics. Shrug.
Black market was totally stable in the 1000:1 mark for months, until the actions from the gov to stop the presidential referendum made again the rich unhappy and they decided to attack with all they have and this includes the media.
95% of the imports in Venezuela are made using the official rates and thats a bit complicated to explain, there is 2 rates wich are 1usd:13bsf (a price fully subsided used mostly for food and items that are considered "basic") and 1usd:658 for everything else and then there was the black market dollar wich is now 1usd:1758bsf
The thing is you can sit here and say the dolar is 1:2000 but it doesn't really mean thats the cost, thats where everyone fails, because neither the venezuelans have the money to pay for it or people want our currency, there is an special case of people doing this kind of trades and are the ones that are fleing the country, emigrating to other places and are desperated in need of USD
In the other hand, is somehow totally fake that we are paying this prices, in fact, noone imports anymore since gov barely gives USD at subsided price thus this is why we are now under scarcity problems.... so there you go.. offer and demand sets the prices but theres actually not really demand, I mean there is an insane demand but not demand for the 2000:1 price, thats just a political fight.
It's a tiny, tiny market, but because the government is set on this stupidity that is called the currency exchange restriction, that tiny market decides how much our worthless currency is worth.
From what I understand, the government has pretty much eliminated the independent media.
More generally, are you saying that the government has done a good job of managing the oil industry, and also developing the rest of the economy so it is not so dependent on oil?
There's no shortage of independent media in Venezuela, both press and TV.
I heard that you can still get the 1USD:13bsf price only if you have connections, and then make insane profits using the black market to exchange the dollars back to bolivars. Rinse, repeat.
And what do you mean no demand for the 2000:1 price? People aren't willing to trade 2000 bolivars for 1 dollar or people aren't willing to trade 1 dollar for 2000 bolivars?
Nowdays, the money got so devaluated that they dont really even need to trade back into BSF.
The way corruption works now is the following:
I as a importer, go to my Chinese friend and ask him a quote for 100 pair of shoes, my chinese provider tells me the 100 pair of shoes are worth 1.000 USD, then I create a company in Panama and Quote myself the shoes for 10.000 USD, I use the new quote to request gov an USD sale of 10.000 using official 1:13 rate. Govs aproves it (by using my connections). I pay the gov 130.000 BsF for the 10.000 USD wich are paid to my panama company (they never give the money directly to the company who is trading the usd but they actually pay to the provider, but remember, the provider is myself in panama) then I use 1.000 to actually buy the shoes and 9.000 as profit.
When the shoes finally arrive to venezuela, marketer does the same, hes supose to sell the shoes at the very same rate he purchased so if you got 100 pair of shoes for 10.000 USD that means each pair of shoe is 100 USD right? that means 1.300 Bsf (using 1:13) thats cool right? beacuse even if they stole 9k, at least the final consumer would pay the 1:13 rate.. but guess what, they also have some child company in here, that would buy all the shoes at 1:13 rate and then chain it over and over to the moment you lose track of the sell/purchase chain and then the shoe is sold at 1:1700 rate to the final consumer.
At the end, the merchant ends up selling 1 single pair of shoes for 170.000 BsF that is even more than he needed to pay for the 10.000 usd at start.
Thats how bad it is.
SO yea, as I said it, they dont need to even get BsF anymore, with just 1 time usd exchange they already profit.
And yes there is no real demand for 1700:1 or 2000:1 or w.e u name because is not sustainable for anyone, ofc unless you really really need it, like if you are cashing out all your stuff because you leave the country or if u are like super sick and cant find medicines etc.
But if you think that people is just normal trading at those prices, that just does not happen.
Even tho there is scarcity and a big one, you can still find subsides things, so either people cant afford to pay for expensive items (at black market) or they just complete ignore the need of USD because how expensive it is.
That's what a price is: the point at which twp parties are willing to trade ownership of their goods and both feel that they have come out ahead of the exchange. If there's very little demand for Venezuelan currency, then of course it will be very cheap in terms of dollars (and high-demand currency, e.g. the dollar, will be very expensive in terms of bolivars).
What is happening to your country is a typical result anytime any government tries to control the currency exchange rate and prices of goods.
This also has the bonus effect of increasing corruption because it incentivises paying a bribe to a government official rather than dealing with the regulations.
Venezuela got away with it, somewhat, when you had oil money coming in. Even then your average standard of living was low. Now that oil prices have collapsed, you are where you are and absolutely nobody is surprised.
Your government simply needs to let go and allow your currency and prices of goods float freely according to supply and demand.
Is anyone in your government even considering it?
Venezuela problem is not socialism or w.e method, we actually had everything. Our all time problem was corruption and we had it during our whole story, is not something that came with chavez or with socialism, we had this very same problems 30,40,50,60 years ago.
Is there any actual evidence that natural resource wealth is strongly correlated with level of development?
"Why Nations Fail" is a great book that goes over this.
That said, the consensus is actually the opposite - if the government controls large stocks of natural resources, they tend to focus on resource extraction rather than developing their economy or civil society. If you can get foreign engineers to run your mines / oil wells / etc (and you definitely can) you don't even need schools for indigenous engineers to keep things running. This is the "resources curse".
OTOH when you have a pre-existing, well-functioning government & society that happens upon a natural resource windfall, like Norway or North Dakota, it's pure gravy.
The problems only seem to happen when the entire economy is organized around exporting extracted natural resources. And a lot of those problems are as economic as they are political. Local economies dominated by a single sector tend to see smaller versions of the same problems, regardless of the sector.
Money can buy development of many kinds, so of course there is a link.
The question is - can the country organize itself in a manner such that it is able to extract the resource, make a profit, and spend it effectively?
That's the question.
Venezuela has problems:
A) A lot of it's oil is 'tar sands' - Canadians are the only people who can deal with this complexity right now. It's expensive and complex to extract.
B) Total disarray and corruption in governance and private sector.
C) Chavismo Socialism.
So, those things cause all sorts of other things to dysfunction as well, they're all interconnected.
Sure - consider that an abundance of coal, when discovered, kickstarted the Industrial Revolution in the UK, and hence, the entire world. Norway has managed its oil wealth very well. Australia exports minerals but is relatively well-developed.
But of course there are plenty of counterexamples, probably far more actually: Venezuela of course, Argentina ought to be and used to be stunningly wealthy, the oil-rich countries of the Middle East...
Have to say that's a significant understatement. Australia now has the world's #1 or #2 richest median household in regards to net wealth. Their economic boom the last 20 years was almost entirely due to commodities + China.
Canada is in the same boat as Australia. Highly developed, well off middle class, high wealth creation the last 20 years. Almost entirely due to the commodity boom over that time.
https://www.youtube.com/watch?v=OrfM5UD-Azk
Hint: It did not begin with Chavismo, but it has got worse since.
My take is that (a) development of political institutions and functioning civil society is really hard, (b) being a petrostate makes it much harder, and (c) when you’re a weak undiversified petrostate and oil prices collapse, heaven help you.
If you're looking for a neutral analysis that won't blame policies instituted or continued by the group that has been in power for 20 years for its current situation, you're looking for something that is impossible. Saying that they have completely failed to prevent the predictable catastrophe that would be caused by the fall in oil prices is undeniable. Blaming it on the rich who are reaping massive profits by exploiting Venezuela's policies instituted to mitigate the harm to the populace is like blaming the wind. Rich are going to rich, it was up to Chavez to come up with a sustainable defense to that rather than simply pumping more petrodollars in. It was a boat with a big leak, and it's becoming more leak than boat.
So, it's more like 'Venezuelan economy and governance is failing -> nobody wants Venezuelan Bolivars -> currency loses value rapidly
Funnily enough, one of the most perplexing thing about Venezuela's disintegration is that they haven't defaulted on any bonds, even though they're paying exorbitant interest rates. See https://www.bloomberg.com/news/articles/2016-07-04/venezuela...
They're going to run out of money to pay bondholders soon, though.
Even among politicians and leaders.
They see inflation, then blame outsiders etc. - and then try to fix prices / grab private businesses which only exasperates the problem.
The problem with a catch all blockchain solution is that if Venezuela itself just wrote a bitcoin clone, you would not solve any of the problems. In the same way that bitcoin proper has been hijacked by Blockstream ltd or how the developers of Ethereum decided to rewrite history, if it were the Venezuelan government implementing the cryptocurrency it would also be in their power to modify the protocol however they want, assuming they make their implementation the only officially sanctioned / legal one.
Even without that, many coins - btc, doge, and eth - have all proven how users simply abandon the money than try to fork a broken development process. It would be very unlikely you could mobilize the complacent mining network of a Venzcoin to switch to clients that fight against state manipulation rather than see the network slowly die off to corruption in the same way almost every cryptocurrency so far already has (~500+ historically, only ~10 at any given time actively trading).
Naturally, the problem is but a mere implementation detail.
EDIT: I posted this comment and immediately refreshed the page. I took no more than 2 seconds, and this comment already had 0 points. No real user would be able to reload a discussion page, recognize a comment as a new, read it and downvote, all of this within 2 seconds after the comment was posted. I bet some bots do this, maybe this is even happening on the server side. Thank you for providing the best evidence for my words!
The comments you're referring to were rightly flagged by users as containing nothing more than empty political rhetoric. We don't need posts on HN like "This is what socialism looks like. Bernie fans take note." This would be just as true if you flipped all the ideological bits.
I've given you many detailed explanations in response to these insinuating comments about HN, and already asked you once to stop. Every sinister claim you've made has had a simple factual explanation. If you are open to changing your mind, you now have lots of good information; if not, that's your prerogative; either way, it's high time you stopped posting these harmfully misleading comments here.
http://www.npr.org/sections/money/2016/10/21/498867764/episo...
