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Brazil 1980-1994. The supply problem only started when the government decided to price control everything, before that you could easily buy all you needed, only

by lnino 9y ago

Brazil 1980-1994. The supply problem only started when the government decided to price control everything, before that you could easily buy all you needed, only you'd need spend all your wages the day they paid you, or you'd lose 30% of it every month. Inflation got to above 5000% a year, but there was never mass starvation like in other places. For a few months people couldn't buy any kind of meat or eggs, but things went back to "normal" when the government lifted price control. Source: I lived there, never skipped a meal. But I was quite shocked the first time I saw something costing the same as it had the previous week, it was in 1994. The same happened in Venezuela, only they weren't able to control it. Inflation preceded the scarcity, and then scarcity made inflation even worse. And now they have mass starvation, no medicines etc. That's fairly typical. Government prints money, there's hyper-inflation, government tries to fix things by banning marking prices up, people stop selling and manufacturing stuff; scarcity and having to go the black-market to get food makes inflation even worse.

lnino 9y ago
Also note that in both cases (Venezuela and Brazil) there was no external force (war or commercial ban) that artificially reduced supply. At the time Brazil started experiencing hyper-inflation, it was already one of the world's top beef producers, still beef was up 5000% a year. Venezuela was selling it's oil at peak prices to the US when their hyper-inflation started. For a while gas was the only affordable product in the country, because the production kept pace with the money printing. There's just no explanation for inflation in Latin American countries that haven't seen a war or major natural disaster in 100 years, other than bad spending policies. The government themselves admitted that in most cases, and were able to get inflation back in track with massive cuts in spending.
- crdoconnor 9y ago
  Hyperinflation only kicked in in Venezuela after the plunge in oil prices, but up until that point industry in Venezuela had been dying. In Brazil it followed and was mainly triggered by the 1970s energy crisis.
  - lnino 9y ago
    There was already super high inflation in both cases before the supply crises. It's just it got way worse because the government reacted to the threat by printing even more money to pay for its spending. Unless you think 100% a year is not hyper-inflation. And how the hell an energy crisis can get the price of beef to go up 5000% a year, in a country that's a leader in beef production?
    - crdoconnor 9y ago
      50% monthly inflation is a common definition. It's around the point where inflation doesn't tend to ever come down again. Iraq has had 300% a year at one point and it came down.
RobertoG 9y ago
Unfortunately I can't discuss Brazil because I have not information, but thanks for pointing it, I will try to look into it. Venezuela seems to me a similar case to Zimbabwe. Their only asset (oil, agriculture in the case of Zimbabwe) was taken from the hands of the people that was exploiting it (if that it's fair is another question) and the production plunged (1). It didn't help that the price of oil dropped at the same time. So, a supply problem also. The consequences: they can't get foreign currency. As they don't produce almost anything else than oil they have to import everything. The value of their currency goes down, they have "to print" money to keep the government working. Hyperinflation. They try price control (that don't work very well). If there is a "fairly typical" process for hyperinflation is that one. (1). https://tradingeconomics.com/venezuela/crude-oil-production https://tradingeconomics.com/venezuela/crude-oil-production
- lnino 9y ago
  Hyper-inflation started before the oil price dropped.
  - RobertoG 9y ago
    But not the drop in oil production: https://tradingeconomics.com/venezuela/crude-oil-production https://tradingeconomics.com/venezuela/crude-oil-production https://tradingeconomics.com/venezuela/inflation-cpi https://tradingeconomics.com/venezuela/inflation-cpi Please, for a better comparative, view it with the 5 years window for the graphs.
  - lnino 9y ago
    Take a look at other countries historical inflation too. I bet you'll see 50%-100% inflation rates before the supply problems started. Only after the government realizes they can't indefinitely finance their spending by printing money, then they turn to seizing wealth production, or do stupid things like price control. Then things get really ugly.
    - infowl 9y ago
      Do you have proof? It's difficult to tell if statements are true without hard evidence and data to back the claim.

by lnino 9y ago

lnino 9y ago

Also note that in both cases (Venezuela and Brazil) there was no external force (war or commercial ban) that artificially reduced supply. At the time Brazil started experiencing hyper-inflation, it was already one of the world's top beef producers, still beef was up 5000% a year. Venezuela was selling it's oil at peak prices to the US when their hyper-inflation started. For a while gas was the only affordable product in the country, because the production kept pace with the money printing. There's just no explanation for inflation in Latin American countries that haven't seen a war or major natural disaster in 100 years, other than bad spending policies. The government themselves admitted that in most cases, and were able to get inflation back in track with massive cuts in spending.

crdoconnor 9y ago
Hyperinflation only kicked in in Venezuela after the plunge in oil prices, but up until that point industry in Venezuela had been dying. In Brazil it followed and was mainly triggered by the 1970s energy crisis.
- lnino 9y ago
  There was already super high inflation in both cases before the supply crises. It's just it got way worse because the government reacted to the threat by printing even more money to pay for its spending. Unless you think 100% a year is not hyper-inflation. And how the hell an energy crisis can get the price of beef to go up 5000% a year, in a country that's a leader in beef production?
  - crdoconnor 9y ago
    50% monthly inflation is a common definition. It's around the point where inflation doesn't tend to ever come down again. Iraq has had 300% a year at one point and it came down.

RobertoG 9y ago

Unfortunately I can't discuss Brazil because I have not information, but thanks for pointing it, I will try to look into it. Venezuela seems to me a similar case to Zimbabwe. Their only asset (oil, agriculture in the case of Zimbabwe) was taken from the hands of the people that was exploiting it (if that it's fair is another question) and the production plunged (1). It didn't help that the price of oil dropped at the same time. So, a supply problem also. The consequences: they can't get foreign currency. As they don't produce almost anything else than oil they have to import everything. The value of their currency goes down, they have "to print" money to keep the government working. Hyperinflation. They try price control (that don't work very well). If there is a "fairly typical" process for hyperinflation is that one. (1). https://tradingeconomics.com/venezuela/crude-oil-production https://tradingeconomics.com/venezuela/crude-oil-production

lnino 9y ago
Hyper-inflation started before the oil price dropped.
- RobertoG 9y ago
  But not the drop in oil production: https://tradingeconomics.com/venezuela/crude-oil-production https://tradingeconomics.com/venezuela/crude-oil-production https://tradingeconomics.com/venezuela/inflation-cpi https://tradingeconomics.com/venezuela/inflation-cpi Please, for a better comparative, view it with the 5 years window for the graphs.
- lnino 9y ago
  Take a look at other countries historical inflation too. I bet you'll see 50%-100% inflation rates before the supply problems started. Only after the government realizes they can't indefinitely finance their spending by printing money, then they turn to seizing wealth production, or do stupid things like price control. Then things get really ugly.
  - infowl 9y ago
    Do you have proof? It's difficult to tell if statements are true without hard evidence and data to back the claim.