There is so much about Venezuela that is instructive. First and foremost is that Socialism, every time it is tried, doesn’t work. The second is why Libertarians are always on about fiat currency and the Federal Reserve. Paper money, while useful, is nothing if not backed by something of actual value. As long as things move along nicely and we all agree on certain things un-backed currency does okay. The Federal Reserve spends a great deal of effort trying to make sure the USD doesn’t fluctuate greatly in value and does so through various artificial means. For the most part, they work. But when they don’t work, all hell breaks loose. That’s what has happened in Venezuela. The paper money is now virtually worthless.
This article explains how looters left money behind at a store they looted because the 500 or so 20-bolivars bills were worth one one hundredth of a penny. Those 500 bills were equal to 5 cents. What would have purchased, according to the author, a fine meal for two at a good restaurant (with wine) suddenly was only able to buy a cup of coffee and now it takes 100 of them to make a penny.
Money is Worthless in the END
What do you do when this happens? According to the author his sound advice is, “The second you’re paid you run out as fast as you can to buy something – anything – while you can still afford it. It’s better to hold almost any asset than money, because assets hold their value and money.”
I have often joked on the Libertarian pages when they puffed up Bitcoin that I was investing in chickens. “Now there’s something that will be valuable in the Apocalypse”. They laugh, at me thinking by Apocalypse I meant the end of the world. I just meant the end of MY world. The world hasn’t come to an end, but for the people in Venezuela they are suffering an apocalypse.
“Every last avenue for people to put a meal on the table has been exhausted. A video that went viral recently showed Venezuelans literally running into a cow pasture to stone a calf to death to try to get a meal.” They have eaten pets, zoo animals, and whatever else they can get.
In a way Democracy is also at fault
While it is true that the ideology of Socialism killed Venezuela Democracy played its part and that much is important to understand. As that country became more and more democratic the people began to vote themselves more and more goodies. We see that same trend happening in America. Hopefully our representative form of government will help keep us from meeting the same fate. But with our currency already flimsy it won’t be easy. We need to understand what they didn’t understand in Venezuela – freedom and free markets. It is capitalism that has made America the most prosperous country the world has EVER known.
Writing for the Mises Institute Rafale Acevedo and Luis B. Cirocco of Venezuela said, “…socialism is the cause of the Venezuelan misery. Venezuelans are starving, eating garbage, losing weight. Children are malnourished. Anyone in Venezuela would be happy to eat out of America’s trashcans. It would be considered gourmet.” That visual should be a wake up call to anyone who is willing to listen. Sadly so many in America aren’t willing to listen. Perhaps that’s because many in America aren’t willing to speak. They don’t want to rock the boat with friends and family, they don’t want to be “that guy”, and they don’t want to share things on Facebook for fear of being defriended or revealing too much of their politics. I understand. It’s very very hard to speak your mind and to know enough about a subject to defend it. Maybe just hand them 60,000 Bolivar and treat them to a cup of coffee while you discuss it.
A friend recently sent me a photograph that tells a powerful story about the situation Venezuelans find themselves in now. It’s not a very good picture, really, just a blurry cellphone shot of trash: some wrapping material, an old CD — the detritus left behind after a store was looted last week in San Felix, a city in the country’s southeast.