World View: China Aids Venezuela as Inflation Rate Exceeds 1 Million Percent

BEIJING, Sept. 1, 2015-- Chinese President Xi Jinping, right, meets with Venezuelan Presid
Xinhua/Li Xueren via Getty Images
John J. Xenakis

This morning’s key headlines from GenerationalDynamics.com

  • China aids Venezuela as inflation rate exceeds one million percent
  • Venezuela migration crisis continues to grow

China aids Venezuela as inflation rate exceeds one million percent

During his televised speech last year, Maduro grabs an empanada (a rich pastry) from his desk drawer when he thinks the cameras are off, while most of his people are starving (Caracas Chronicle)
During his televised speech last year, Maduro grabs an empanada (a rich pastry) from his desk drawer when he thinks the cameras are off, while most of his people are starving (Caracas Chronicle)

In mid-August, Nicolás Maduro, president of the socialist government of Venezuela, announced a new package of economic reforms that were supposed to stop the country’s slide into economic disaster. ( “19-Aug-18 World View — Socialist Venezuela introduces new fantasy currency and new Socialist changes”)

At that time, Maduro said: “I want the country to recover and I have the formula. Trust me.”

To the surprise of few if any people, his “formula” has only sped up the economic disaster.

The first part of Maduro’s formula was to devalue the bolivar currency by 96 percent and then introduce a new currency, the Bolivar Soberano (“sovereign bolivar”). That does not seem to have stopped inflation.

There are no longer any official Venezuelan government figures on inflation because the figures were so embarrassing to the socialists there, they decided to stop publishing them three years ago. So the opposition congress has been computing its own figures and publishing them.

According to opposition legislator Angel Alvarado, daily inflation is now 4 percent, which comes to 1.7 million percent per year. During the past year, prices rose a mere 488,865 percent but the inflation rate continues to accelerate.

On Tuesday, the International Monetary Fund (IMF) issued its own estimate of Venezuela’s inflation rate, saying that it would rise 1.4 million percent in 2018, and up to 10 million percent in 2019.

The second part of Maduro’s magic formula was to raise the minimum wage by 3000 percent. Maduro has raised the minimum wage 24 times since 2013. Within a month, it was clear that the minimum wage increase was causing an additional economic disaster: Few companies or shops were able to pay the increased minimum wage, so massive numbers of people lost their jobs.

In September, Maduro paid a visit to Xi Jinping in Beijing and apparently came back home to Caracas with a lifeline.

China agreed to invest an additional $5 billion, which would boost oil production and nearly double its oil exports to China. “We are taking the first steps into a new economic era,” said Maduro. Reuters and Reuters and Bloomberg (19-Sep) and Al Jazeera (19-Sep)

Venezuela migration crisis continues to grow

Some six million people have fled from Syria since the war began in 2011, and that is currently the worst migration crisis in the world. The second worst is the Venezuelan crisis, where some 2.3 million Venezuelans have fled from the Socialist paradise.

Unable to feed their children or provide medicines for illnesses, or running from violence, there are 4,000 Venezuelans crossing the border into Colombia each day. Colombia has called for a regional response, saying the migrant crisis was costing it about 0.5 percent of GDP – around $1.5m. Thousands travel on to Ecuador, Peru, Chile, Mexico, or Brazil. This has placed an enormous financial burden on neighboring countries and many have been closing their borders. The migrants are willing to work for little pay, and so they take the jobs of each country’s citizens, further destabilizing the region. UNHCR and Guardian (London) and Merco Press and Fair Observer

Related Articles:

KEYS: Generational Dynamics, Venezuela, Hugo Chávez, Nicolás Maduro, Angel Alvarado, International Monetary Fund, IMF, Peru, Ecuador, Colombia, Chile, empanada
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