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The high fixed overvalued exchange rates were the main problem, not price controls. It exacerbated Venezuela's Dutch disease, killing off all export industries
by crdoconnor 11y ago
The high fixed overvalued exchange rates were the main problem, not price controls. It exacerbated Venezuela's Dutch disease, killing off all export industries apart from oil.
Essentially the opposite approach was taken in China (fixed undervalued exchange rates), which led to staggering levels of growth.
- Retric 11y agoChina peak growth was far slower than several other Asian countries post WWII. That was intended as steady growth was intended to reduce political instability. But, it also slowed down there overall growth significantly. EX: Japan went from 2T to 3T in just 2 years. That's completly unsustainable.
- crdoconnor 11y agoAll the Asian tigers suppressed the value of their currencies by loading up on US treasuries. Venezuela instead tried to fix the value of its currency at a far too high level.
- WalterBright 11y agoFixed exchange rates are just another form of price controls.