The Disaster No One Talks About: Venezuela

Refugees in Bogata make crafts out of 
worthless Venezuelan cash.

Trendy economists say the US can spend much more, and pay for it by printing more money. This won’t cause further inflation, say "modern monetary theorists."

But one country recently tried “printing more money." Here's what happened:

A lot of us either never knew or have forgotten that Venezuela was the wealthiest nation in South America. Petroleum revenue rewarded it with wealth. It was a socialist government that became a darling of the Left. Hugo Chavez (president from 1999-2013) spent big bucks on social programs. He even sent money to the U.S. to help provide heating oil for poor Americans.

A combination of political corruption and hyperinflation after his departure sent the country's economy into a tailspin. In 2014 inflation stood at 69%. By 2015, inflation was now 181%. That means what used to be a dollar in January 2014 was less than 30 cents by the end of two years. Inflation was up 800% by end of 2016 and 4,000% in 2017, followed by 1.7 million percent in 2018.

According to details at Wikipedia "By early April 2019, the 18,000 Bs.S monthly minimum wage was the equivalent of $5.50 – less than the price of a McDonald's Happy Meal. Ecoanalitica estimated that prices jumped by 465% in the first two and a half months of 2019. In March 2019, the Wall Street Journal stated that the 'main cause of hyperinflation is the central bank printing money to fund gaping public spending deficits,' reporting that a teacher could only buy a dozen eggs and two pounds of cheese with a month's wages."

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Over the past 30 years my brother has taken 28 trips to South America to teach counseling to church leaders in various countries. When the Venezuelan economy imploded, as many as six million citizens fled their homeland, flooding into neighboring South American countries. My brother saw first-hand the challenges of this refugee crisis, which has received little coverage in our media here. Only Saudi Arabia has produced more refugees than Venezuela since 2000. 

If the war in Ukraine continues, refugee numbers will likely surpass Venezuela in magnitude, though it is a crisis of a different character. 

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Please note, this is not an appeal to eliminate social programs. Rather it is an appeal for our government to embrace basic fiscal responsibility. The motive behind much government largesse seems more about winning voters than doing what is best for these voters and the future of the country. 

The second lesson in this story--the first being that we need to cringe when politicians say they want to solve our problems by printing more money--is to note how quickly the strongest economy became a disaster.

America is not immune from stupidity or corruption. Let's not say "It can't happen here." Rather, let's say, "It MUST NOT happen here."

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Read more about Hyperinflation in Venezuela.

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