yes and no. no in that chavez is ignoring the oil infrastructure that provides the money and using the funds to boost his popularity. in the short term this is good for poor people in the long term, it could be disastrous for every venezuelan. it's like spending your money without ever going to your job. sure, you're wife will be happy, until you get fired or your company goes bankrupt. although, with oil prices still relatively high, there's little chance of that unless an alternative fuel is found or oil prices drop like a stone. then you'll see chavez bloated ship smash on the rocks. No in that he continues the several decades of mismanaged which has resulted in people saying "venezuela used t be a wealthy country." sadly, like many latin american countries, it's stuck between an incompetent ruling elite and an incompetent strong man intent on using the US as his country's scapegoat. Still, between him and morales, it's providing chileans with a new source of household help since the natives won't take those jobs anymore.

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"You down wit OPM?"
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http://caracaschronicles.blogspot.co...socialism.html

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My mother read somewhere that about 5% of the population has left over the past few years (3? 5? I forget how many).

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I really think the Citgo ads are designed to do one thing--embarrass the Bush Administration.

Seriously, there is no business gain to be made by running the heating oil for needy homes ads other than to stir up more hatred for Bush on his home turf.

For that, I'll give Chavez some credit for using simple economics sprinkled with a little propaganda to made that egg on Bush's face smell that much sweeter. Remember, Bush's entire family depends on energy company proceeds and interests--and their family does much better economically when oil prices are way up.

[The worst part of George's earliest years out of Midland-Odessa was during the 80s when Texas was in a local recession over lost oil profits]


I doubt the people of Venezuela are capable of swallowing their economic picture much the same way Argentina's population didn't see the currency collapse until just before the bank crisis began.

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WHYY pays their CEO $750,000 a year. So WHYY should I renew my membership? Seems they have no problems finding money and spending it unwisely.


And this is why you should donate to PACCA, not PETA:

In September, PETA made headlines in Vermont and across the nation for asking Ben & Jerry's ice cream to use human breast milk in their ice cream, instead of cow milk

Chavez promised to clean up the corruption and people elected him. Too bad his administration has turned out to be one of the most corrupt in recent memory. he big difference is he lets the poor masses in on the corruption like the Philly pols do. I guess he figured out that you're better off buying thousands of votes for a few dollars apiece than giving millions to a handful of friends.

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ohh man . . . Milty!

Inflation isn't just from the government spending money too much money into circulation by printing it . . . it also has to do a lot with lending practices, interest rates, and in an oil rich economy flooded with foreign cash, it comes from having so much of it people start using it to blow their noses with it.

The problem with oil money in Venezuela is that it's concentrated at the top and Venezuela doesn't have an economy diversified enough for that money to flow to other sectors. It probably only exacerbates the situation because a lot of that oil money is going right back out of the country to buy luxury items not produced at home. That money should be kept at home and invested as productive capital - putting poor people to work in businesses and industries. Building yachts, sewing Versace shirts, making flat-screen TVs, assembling Mercedes-Benz (hey, if they can do it in Alabama they can do it in Venezuela!). Hiring gardeners and waiters isn't enough and it seems like it's going to be another 10-15 years before the country has a substantial crop of college grads ready for financial services.

Rapid inflation really only affects the poor. Especially in countries with still-developing economies and especially when certain sectors, in an anticipation of future shortages start hoarding (to sell for outrageous prices later) thereby creating an immediate shortage.

The rich in Venezuela will be hit by a currency collapse. Many of Argentina's rich became humbled in the banking crisis because they couldn't convert their money fast enough and get their capital out of the country before everything was locked down.

And even then, the exodus of wealth out of the country as everyone tries to cash the local currency for safer foreign capital only means hasty safe-haven nonproductive investments will be made to "secure" the wealthy--so they'll stop getting richer for a while. But at the same time, the rest of the country will be in chaos. And not all the wealthy will be smart enough to time the collapse. If you don't do it quickly enough, you'll be penniless just like everyone else when the time comes, and your physical holdings in the country won't be worth a hill 'o beans since no one will buy your property (expecting the prices to get lower).

Deflation resets economies and throws things backwards for all classes of people.

Revolucion!

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WHYY pays their CEO $750,000 a year. So WHYY should I renew my membership? Seems they have no problems finding money and spending it unwisely.


And this is why you should donate to PACCA, not PETA:

In September, PETA made headlines in Vermont and across the nation for asking Ben & Jerry's ice cream to use human breast milk in their ice cream, instead of cow milk

First, there's no comparing Argentina's (banking) collapse to Venezuela's inflation.

Second, i seriously doubt this is a conspiracy. I mean, if it is, then i give the guy a lot of credit. That takes cajones. Hyperinflation doesn't do anyone any good but when your only export just shot up in price and you don't have domestic production of much else, and not much of a domestic market for much of anything anyway, and your streets are awash in yuan, dollars, euros, yen, and rupees there's not much to do with your own currency. You use the foreign currency people are paying you with to pay for that new Jag and hot tub. There's not much you can do but enjoy the show and, ohh, i don't know . . . dollarize the economy?

Milton was, of course, a brilliant man. what he said was that "inflation is always and everywhere a monetary phenomenon." that much is mostly true, and expanding credit is a measure of money. Lending practices are partially a result of business cycles but also, to a large extent, a reflection of the country's monetary policies. The more money that is available, teh freer banks are with it. Basically, the first two aspects you mention fit in nicely with Milton's theories.
Which hits on Chevez's fatal flaw. Chavez controls PVDSA and the the taxes the transactions. I don't know the percentage, but I'd wager to say that Hugo controls the majority of the money being made in Venezuela. His approach, as is the majority of his ilk, is to use that money to give to buy his base. theoretically he is "improving" the lot for Venezuela's poor but, like the old chinese saying (it's chinese right?)..."feed a man a fish and he'll eat for a day, teach him to fish, and he'll eat for a lifetime"...he is taking the wrong approach. The majority of the money is spent on programs, that is, spent by bureaucrats with the remaining given as transfer payments. people who receive transfer payments are likely to spend that money, not having a business or anything really to invest in...thus further driving up inflation. What makes the inflation mostdamaging, of course, is just what you noted...the people benefitting from the spending are not generating this wealth. It's not what people are buying (luxury goods, theoretically, be produced at home) but that the decisions of what to spend the money on and whether to spend or invest are being made by the wrong people. If PVDSA were a private firm and allwoed to operate as such, it woudl pay it's employees. IF the oil company was generating the wealth, it wouldreinvest in itself, pay dividends, and pay its employees. It's shareholders and employees woudl then decide whether to invest or spend the money. There are a number of factors, of course, outside of this equation such as how easily businesses can set up in venezuela and thus, how easily venezuela can find its comparative advantages. Chavez is not letting bankers and entrepreneurs decide where to spend the money nor is he making it easier for entreprenurs to set up businesses (teach a man to fish)) and thus is not helping anyone in the long term, IMO. a similar example back home would be Mark Cohen's push to raise the minimum wage rather than to make it easier to get a job or start a successful business.
I cannot agree with this statement. Rapid inflation hurts everyone, except perhaps those wealthy enough to hold their money outside the country (in, say, a swiss bank account, outside the government's grubby hands). Rapid inflation can all but destroy middle classes. It is not generally certain sectors hoarding goods. Hoarding may happen as a result of hyper inflation. In general, it's a result of government policies. Argentina dollarized their economy yet never took care of the fundamental reasons it had hyperinflation...that is out of control government spending and misallocation of capital. the dollar peg had good benefits, namely stability, and, for a time, did restrain spending some...but in the long run, it merely acted to mask the underlying problems. That's the way I nuderstand it anyways.

__________________
"You down wit OPM?"
Fumo: "Yeah, you know me!"

Venezuela had its own banking collapse in the 90s and a lot of people lost their money (I don't think the Venezuela's equivalent of the FDIC had the resources to cover all the losses). Some banks had interest rates as high as 40% right before it happened. Now interest rates are mostly below 10% (don't really keep up with inflation). Most people just sink their money into improving their homes (some used to buy dollars, but now the draconian exchange controls make that extremely hard) because saving over the long term means you lose money.

Of course, most regular savings accounts here in the U.S. have trouble beating inflation. However, it isn't too hard to find fairly stable alternate vehicles that do (online banks, treasury bonds, etc).

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