THIS IS WHAT YOU GET WHEN A COUNTRY IS RUN BY A MAFIA DISGUISING THEMSELVES AS COMMUNISTS OR SOCIALISTS! CAN BE CUBA, VENEZUELA, ECUADOR, YOU NAME IT! EXCELLENT ANALYSIS ! WASHINGTON POST: Why are Venezuela’s supermarkets so empty? - By Matt OBrien Venezuelas supermarkets dont have enough food. Or toilet paper. Or, well, anything really. And thats why the government is about to start fingerprinting people to ration goods. But why cant an oil-rich country even keep its stores stocked? Well, its the price controls, stupid. They always and everywhere create shortages. Heres why they have done so in Venezuela. 1. The government is running a massive deficit, around 14 percent of GDP, that its financing with the printing press. The problem, of course, is that money is worth less when you create more of it to pay your bills. So its not surprising that Venezuelas inflation is officially 60 percent, and might actually be as high as 300 percent. 2. But the government thinks it can wish away this inflation with currency and price controls. Heres how they work (or dont). Theres an official exchange rate of 6.3 bolivares per U.S. dollar that only the government and its cronies have access to. Then theres a second tier for the slightly less connected at 10 bolivares per dollar. A third one at 50 bolivares per dollar for those even more on the outside. And finally, theres the black market exchange rate—emphasis on the word market—that tells us it should really be something like 68 bolivares per dollar. In other words, political insiders can get dollars for ten times cheaper than almost everybody else. Venezuela strictly controls prices, too. Everything from milk to sugar to, yes, toilet paper has an official price that stores arent supposed to change. Of course, sometimes they do. But the Maduro regime has promised to inspect them even more closely to put an end to these market prices. 3. Now, anytime you try to suspend the law of supply and demand like this, youll get shortages. Venezuela imports most of its basic goods, so its only profitable to sell them at the official prices if you can buy them overseas with dollars you got at the official exchange rate. Businesses that have to pay 60 bolivares for one dollar arent going to spend it on things the government will only let them sell for, say, 20 bolivares. Theyll leave their shelves empty instead. CLICK LINK FOR ENTIRE ARTICLE! washingtonpost/blogs/wonkblog/wp/2014/08/29/why-are-venezuelas-supermarkets-so-empty/
Posted on: Sat, 30 Aug 2014 16:05:47 +0000
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