6 ms·

You're missing the whole point of hyperinflation. The government is printing money to pay expenses, like salaries and military expenditures. If they adopted t

by gozur88 10y ago

You're missing the whole point of hyperinflation. The government is printing money to pay expenses, like salaries and military expenditures. If they adopted the dollar they'd lose the ability to do that.

Dylan16807 10y ago
Is that really the main cause of their inflation? It's trivial to fix that cause; for example give each governmental department a budget that increases 5% per month and not a penny more.
- deleted 10y ago
  [deleted]
- ufo 10y ago
  Yes, printing money is the root cause of the inflation. But no, you can't just make a trivial fix like you said. Venezuela has a dysfunctional government that used to be propped up by oil exports back when oil used to be a highly-priced commodity. After the crash in oil prices, the sorce of income dried up and revealed huge flaws in the country's infrastructure and government inefficiency and corruption.
  - Dylan16807 10y ago
    Printing no money is the default option. Dysfunction and corruption certainly make fixing everything extremely difficult, but you don't have to fix the government to stop the hyperinflation. If you cut off access to whatever printing press or computer is making the money, then there would not be hyperinflation. It being an insufficient fix does not stop it from being trivial and performing its stated goal.
    - ufo 10y ago
      Stopping the flow of money without restructuring the government would result in a total government shutdown and complete chaos. It is not an option.
      - Dylan16807 10y ago
        Right. I was just making a point that the money supply can be reigned in without much manpower. The real idea is not to stop making money, it's to put a lid on the production speed. An armed guard that only allows 5% more production each month than the previous month. This gives the government an enormous budget that never runs out, and at the same time money will continue to hold its value on a week-to-week basis. Now tell me: Is this plan doomed because of some economic fact I'm unaware of, or is it doomed because of corruption and politicking?
        ufo 10y ago
        It is doomed because Venezuela's budget is unbalanced. In the past, the budget only worked because there were large oil-export revenues from PDVSA, the state's oil company. Once that source of revenue collapsed they didn't have money anymore to spend as they did before. They should have cut the budget and fixed the many systemic imbalances in the Venezuelan government and economy but instead of that they insisted on keeping the status quo by printing money to cover the deficit and blaming the crisis on american imperialism.
        Dylan16807 10y ago
        I'm not trying to fix the country, I'm just suggesting a way to avoid hyperinflation. Everything that is already broken would stay broken, but without the additional burden of hyperinflation. Can the plan do that?
        ufo 10y ago
        Unfortunately not. Things would not stay just as broken because if the Venezuelan government stopped printing money it would stop being able to pay its debts. Unless they do substantial budget cuts (which were are so far assuming that they cannot or will not do) they would be forced to stop paying suppliers and public servants, which would result in even more chaos than there is right now.
- gozur88 10y ago
  Where is that 5% coming from? They don't have the money. They don't even have the money to pay the expenses they're committed to. Inflation is a tax on people who hold your currency. That's where the money to fund government programs is coming from.
  - Dylan16807 10y ago
    > Where is that 5% coming from? As you said: "The government is printing money to pay expenses". I'm talking about a limit on how much money they print. > Inflation is a tax on people who hold your currency. It is. And it goes from bad to disaster when it goes from inflation to hyperinflation.
    - gozur88 10y ago
      They can't limit the amount they print because otherwise they won't have enough to pay the bills.
      - Dylan16807 10y ago
        The bills are increasing exponentially faster than 5% a month? I want to make it clear that I'm suggesting that they start by printing more than they spent the previous month.
        gozur88 10y ago
        >The bills are increasing exponentially faster than 5% a month? In absolute units of currency? Yes. When you print money like that every unit of currency is worth correspondingly less. It's exponential, which is how you get 480% inflation this year and a projected 1640% next year in Venezuela without a constant dollar increase in spending. The only way out is a drastic reduction in services.
        Dylan16807 10y ago
        That projected amount is assuming they don't restrict how much they print, right? I don't see how all of the following could be true at the same time: 1. The inflation is caused by the printing of more money. 2. Printing enough money to inflate the supply less than 5% per month. 3. Costs increasing more than 5% per month.

by gozur88 10y ago

Dylan16807 10y ago

Is that really the main cause of their inflation? It's trivial to fix that cause; for example give each governmental department a budget that increases 5% per month and not a penny more.

deleted 10y ago
[deleted]
ufo 10y ago
Yes, printing money is the root cause of the inflation. But no, you can't just make a trivial fix like you said. Venezuela has a dysfunctional government that used to be propped up by oil exports back when oil used to be a highly-priced commodity. After the crash in oil prices, the sorce of income dried up and revealed huge flaws in the country's infrastructure and government inefficiency and corruption.
- Dylan16807 10y ago
  Printing no money is the default option. Dysfunction and corruption certainly make fixing everything extremely difficult, but you don't have to fix the government to stop the hyperinflation. If you cut off access to whatever printing press or computer is making the money, then there would not be hyperinflation. It being an insufficient fix does not stop it from being trivial and performing its stated goal.
  - ufo 10y ago
    Stopping the flow of money without restructuring the government would result in a total government shutdown and complete chaos. It is not an option.
    - Dylan16807 10y ago
      Right. I was just making a point that the money supply can be reigned in without much manpower. The real idea is not to stop making money, it's to put a lid on the production speed. An armed guard that only allows 5% more production each month than the previous month. This gives the government an enormous budget that never runs out, and at the same time money will continue to hold its value on a week-to-week basis. Now tell me: Is this plan doomed because of some economic fact I'm unaware of, or is it doomed because of corruption and politicking?
      - ufo 10y ago
        It is doomed because Venezuela's budget is unbalanced. In the past, the budget only worked because there were large oil-export revenues from PDVSA, the state's oil company. Once that source of revenue collapsed they didn't have money anymore to spend as they did before. They should have cut the budget and fixed the many systemic imbalances in the Venezuelan government and economy but instead of that they insisted on keeping the status quo by printing money to cover the deficit and blaming the crisis on american imperialism.
        Dylan16807 10y ago
        I'm not trying to fix the country, I'm just suggesting a way to avoid hyperinflation. Everything that is already broken would stay broken, but without the additional burden of hyperinflation. Can the plan do that?
        ufo 10y ago
        Unfortunately not. Things would not stay just as broken because if the Venezuelan government stopped printing money it would stop being able to pay its debts. Unless they do substantial budget cuts (which were are so far assuming that they cannot or will not do) they would be forced to stop paying suppliers and public servants, which would result in even more chaos than there is right now.
gozur88 10y ago
Where is that 5% coming from? They don't have the money. They don't even have the money to pay the expenses they're committed to. Inflation is a tax on people who hold your currency. That's where the money to fund government programs is coming from.
- Dylan16807 10y ago
  > Where is that 5% coming from? As you said: "The government is printing money to pay expenses". I'm talking about a limit on how much money they print. > Inflation is a tax on people who hold your currency. It is. And it goes from bad to disaster when it goes from inflation to hyperinflation.
  - gozur88 10y ago
    They can't limit the amount they print because otherwise they won't have enough to pay the bills.
    - Dylan16807 10y ago
      The bills are increasing exponentially faster than 5% a month? I want to make it clear that I'm suggesting that they start by printing more than they spent the previous month.
      - gozur88 10y ago
        >The bills are increasing exponentially faster than 5% a month? In absolute units of currency? Yes. When you print money like that every unit of currency is worth correspondingly less. It's exponential, which is how you get 480% inflation this year and a projected 1640% next year in Venezuela without a constant dollar increase in spending. The only way out is a drastic reduction in services.
        Dylan16807 10y ago
        That projected amount is assuming they don't restrict how much they print, right? I don't see how all of the following could be true at the same time: 1. The inflation is caused by the printing of more money. 2. Printing enough money to inflate the supply less than 5% per month. 3. Costs increasing more than 5% per month.