3 ms·

Now you are mixing two very different situations. BI as a concept do not, and will never, fix exchange rate problems. BI is for when on paper the nation has a

Now you are mixing two very different situations. BI as a concept do not, and will never, fix exchange rate problems. BI is for when on paper the nation has a functioning domestic economy, but one that exclude large parts of the population from taking part in said economy via jobs. Weimar Germany was left with a non-functioning industry after WW1, and saddled with reparations denominated in foreign currency. Even Keynes warned that it would be a mess. Zimbabwe similar ended up with a broken domestic industry, but in this instance it was the leadership that tried to keep up appearance via imports that ran things into the ground. For Venezuela i would say that judge is still out, but the slide started with the bet on oil exports to shore up imports, only or for the oil price to take a dip. but in this instance i can't eliminate the potential for foreign meddling as the leadership had incensed certain world powers...

jimmywanger 9y ago
> For Venezuela i would say that judge is still out, but the slide started with the bet on oil exports to shore up imports, only or for the oil price to take a dip. but in this instance i can't eliminate the potential for foreign meddling as the leadership had incensed certain world powers... The only thing world powers would have to do is let Maduro continue his economic policies. There doesn't need to be an external plot, just stupidity in economic powers. With such high inflation, nobody wants to take the BSF, so they insist on hard currency. Thus, prices increases. Even when you make bread, you need hard currency to buy yeast and machine parts (baking and mixing machines) as most of them are imported. With prices spiking, the government gets the bright idea to slap on price controls, at an artificially low bring to "ensure the common man" has access to goods. The price controls don't allow breakeven considering the cost of production and imports, especially when the price rises faster than price controls allow. So they don't make anything that is price controlled. Also, the price control board is controlled by the government. Every year during Christmas and before elections, the government goes in and slashes prices. Sure, you get a big screen TV for cheap, but they never get imported any more. Same thing with airlines. They're not allowed to repatriate profits at anything close to a realistic exchange rate, so they just stop flying there.

jimmywanger 9y ago

> For Venezuela i would say that judge is still out, but the slide started with the bet on oil exports to shore up imports, only or for the oil price to take a dip. but in this instance i can't eliminate the potential for foreign meddling as the leadership had incensed certain world powers... The only thing world powers would have to do is let Maduro continue his economic policies. There doesn't need to be an external plot, just stupidity in economic powers. With such high inflation, nobody wants to take the BSF, so they insist on hard currency. Thus, prices increases. Even when you make bread, you need hard currency to buy yeast and machine parts (baking and mixing machines) as most of them are imported. With prices spiking, the government gets the bright idea to slap on price controls, at an artificially low bring to "ensure the common man" has access to goods. The price controls don't allow breakeven considering the cost of production and imports, especially when the price rises faster than price controls allow. So they don't make anything that is price controlled. Also, the price control board is controlled by the government. Every year during Christmas and before elections, the government goes in and slashes prices. Sure, you get a big screen TV for cheap, but they never get imported any more. Same thing with airlines. They're not allowed to repatriate profits at anything close to a realistic exchange rate, so they just stop flying there.