Venezuelan officials, including the president, have refused to recognize the government's responsibility for inflation, shortages and famine, calling it "a conspiracy of the U.S. empire," and the head of the National Statistics Institute, Elias Eljuri, has even gone so far as to say that "there is a shortage of food because Venezuelans are eating too much! ". In fact, a little analysis shows that Venezuela's economic collapse of the government is mainly responsible.
First of all, the government did not recognize the laws of the oil market, to save for a rainy day. Oil as the blood of the economy, the history of the price has been fluctuating greatly, but the Venezuelan government believes that the oil mining a barrel less a barrel, coupled with the world's increasing demand for energy, oil prices will only rise will not fall. Because of the national economy tied to the chariot of oil, the foreign exchange earned by exporting oil imported goods to meet the consumer needs of the population, ignoring the development of the local manufacturing sector. Oil prices plummeted, can not earn enough foreign exchange imports of goods, resulting in a shortage of domestic supply of goods.
Secondly, inflation further shrinks imports. During his administration, President Chávez put forward many huge socialist development plans to stimulate economic development through government investment, which required a large amount of monetary support, so the government printed money without restraint, and hyperinflation erupted. on January 1, 2008, in order to cope with inflation Venezuela implemented monetary reform, issuing a new currency, the strong Bolivar (bolívar fuerte, abbreviated as BsF) to replace the existing currency. BsF) to replace the existing currency bolívar (bolívar), the new currency and the old currency exchange ratio is 1:1000, in fact, is to let the currency devalue 99.9%.
But the monetary reforms have not stopped inflation from continuing. Since the Central Bank of Venezuela's money printing machines are no longer able to print money due to a lack of raw materials, it has had to allow foreign private printing companies to print money.In December 2014, President Maduro secretly allowed several private printing companies in Europe to print 15 billion banknotes with a face value of 100 bolivares and 50 bolivares, an average of 500 per person, and let's calculate that at 50-50 split between 100 and 50 bolivares, that's would be the equivalent of the government looting 37,500 bolivares from each inhabitant. The International Monetary Fund predicted in April 2016 that Venezuela's inflation rate would be 481% this year and in 2017 it would reach 1,642%. Venezuela has become the Zimbabwe of Latin America.
Residents don't trust the local currency and exchange it for dollars, and the government has begun foreign-exchange controls so that businesses must turn over their foreign currency to the central bank. Enterprises without foreign exchange can not import goods, and Venezuelan residents rely on imports of daily consumer goods, in this case, the reduction of imports will inevitably lead to a shortage of supply of goods. Even if some enterprises through the black market to get foreign exchange imports of goods, but inflation also eat up the profits of trade, no one will risk engaged in unprofitable international trade. Scarcity of imported goods and pushed up prices, resulting in a vicious circle.
Once again, eating up foreign exchange reserves has turned national debt into garbage.
In 2011, Chavez repatriated $11 billion worth of Venezuelan gold that existed in London, saying it was an exercise of sovereignty over the gold. In fact, the government quickly ate up all that gold. No foreign exchange reserves, it is difficult to issue debt, in addition to a few "old friends" continue to generously assist Venezuela dollars, no country to lend it money. Unable to issue debt and borrow money, the government began raiding its own population for dollars in 2013. In a hyperinflationary economy, the absence of hard currencies such as the dollar in the marketplace has made it more difficult to trade goods because no one wants to take payment for goods in their own currency.