Venezuelan inflation rate hits 30 percent; South American currency planned
“That’s an incredible surge,” Adrian Aguirre, an economist at Caracas-based Bancaribe SA, said in a telephone interview. “The fact that food prices rose by more than 11 percent is something we’ve never seen in the last decade.”
Consumer prices rose 5.2 percent in April from March, according to the central bank’s benchmark Caracas price index, released today, more than double the 2.5 percent median forecast of three economists surveyed by Bloomberg. Annual inflation accelerated to 31.9 percent, the bank said.
Inflation is a natural reaction to fiat money in a free market. It is a chain reaction in effect slow at first but the velocity of money picks up as reaches the broader masses. For example, the grocer puts the food prices up because of the devaluation of a currency based on current and future deficits, bailouts, government spending, and so on.Really it’s like going to a poker match with 500 dollars worth of chips expecting a fair game and one player cleans everybody out because he keeps getting another stack of 500 dollars infinitely.
Can the developing world or the average person really compete with that? We could not also make the assumption that we heading out of recession that can a dangerous statement seeing as we never carried out the recession after the NASDAQ [Tech] bubble in 2001. It was papered over with a real-estate bubble. Here we are now pretending government is still going save us from recession that 8 years later is still being avoided and compounding. Recessions are important to re-balance economies and purge malinvestment in the world’s economy. Printing prosperity has a finite time-line and capitalism will overtake oligarchs, benefiting society as a whole. Too big to fail is risky, but for who?
Chavez is the classic example of a populist leader leading metastisizing into a dictator and dragging a nation down the road to full-blown dictatorship. Like so many of his ilk, Chavez is possessed of limited intellectual and executive competence but is a brilliant manipulator of popular opinion and a master of political thuggery.
Sadly for Venezuala Chavez will emerge as another brutal, corrupt Latin American dictator lashing out at anyone and any country who opposes him in the guise of the democratic leader of a democratic nation who’s only interest is the welfare of his nation and its people.
Chavez will erase any semblance of democracy – for example, free speech, freedom of assembly,a free press and political dissent – on the pretext that such supression is necesary to preserve Venezualan democracy. He will also probably isolate his nation within the world community tuntil eventually its only allies will be the likes of North Korea, Cuba and other rogue nations. Closing borders and isolating itself will see its social infrastructure decline as intellectuals, doctors, political opponents, journalists, professors and others who contibute to the social well-being of the nation flee for their lives.
Venezuela’s annual inflation rate has surpassed 30 percent after consumer prices surged in April according to MyWay News. The Central Bank and National Statistics Institute on Friday reported a 5.2 percent increase in consumer prices during April, driving up the annual rate to 30.4 percent.
President Hugo Chavez’s government has been struggling against the highest inflation rate in Latin America and a weakening economy in general. Prices increased 11.3 percent from January to April, up from 6.7 percent inflation in the same 2009 period.
Venezuela’s economy shrank by 3.3 percent last year amid a downturn in its all-important oil industry. It’s the nation’s first recession since 2003. The country imports most of its food, and Chavez on Friday announced the government will create an import-export corporation aiming to break with the private sector’s “hegemony.” It wasn’t immediately clear how the new state entity would operate.
Chavez said wealthy Venezuelans involved in the import business “buy abroad, come here and ask for more than it really costs.”
Chavez will likely use Venezuala’s vast oil revenues on building its military might to increase his stranglehold on the country instead at the expense of social programmes. Sadly, the vast majority of his supporters will bitterly reap in the future what they sowed today by voting to end Venezual’s ban on presidential term limits.
South American countries plan new currency
Chavez and other South American leaders have been planning on introducing a unified, bloc currency called the sucre in attempts to relinquish their dependence on the US dollar hegemony in the region. Could this be the pre-cursor to the increasing trend of global trading blocs like the European Union’s EURO currency; the planned Amero of the North American Union; and the planned unified currency for the African Union?
Everywhere you look, the mainstream financial experts are pinning on their “WIN 2” buttons in a show of solidarity against what they see as the number one threat to the Venezuelan economy: Whip Inflation Now.
There’s just one problem: They’re primed to fight the wrong enemy. Fact is, despite ten rate cuts by the Federal Reserve Board to record low levels plus $13 trillion (and counting) in government bailout money over the past three years — the Demand For and Availability Of credit is plunging. Without a borrower or lender, the massive supply of debt LOSES value, bringing down every exposed investment like one long, toppling row of dominoes.
This is the condition known as Deflation.
Bob Prechter uncovered more than a dozen “value depreciating” developments underway in the U.S. economy as the two main engines of credit expansion sputter: Banks and Consumers. Here’s a preview of his findings contained the free report, The Most Important Investment Report You’ll Read in 2010:
* A riveting chart of Treasury Holdings as a Percentage of US Chartered Bank Assets since 1952 shows how “safe” bank deposits really are. In short: today’s banks are about 95% invested in mortgages via the purchase of federal agency securities. Unlike Treasuries, IOU’s with homes as collateral have “tremendous potential” to fall in dollar value. Venezuela’s no different and that’s why they’re wanting to get away from US dollars and into their own regional currency to be moe competitive and less reliant on the monstrous Federal reserve.
Compensating the asymmetries between nations, as well as creating strategic alliances and agreements between Latin American countries, are the most important objectives of the synergy between the Bolivarian Alliance of the Americas (ALBA) and the Unitary System of Regional Compensation (sucre), explained Eudomar Tovar, president of the sucre. “The sucre will be a vital tool for our people, because it will help us to strengthen sovereign production in order to maintain an economic structure consistent with the reality of each country”, he stated.
In its initial phase, the sucre will work as a unit of value and not a currency that depends on an organism emitting paper bills and coins. It has the purpose of serving as a financial instrument that can increase commerce between member nations of ALBA, as well as any other countries that choose to become a part of the project. The sucre seeks to replace the US dollar –in the medium and long term– as the principal interregional currency used between members of the Alliance. Source