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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.
  • lnino 9y ago
    The burden of proof is on the side making the nonsensical claim that hyper-inflation is always caused by supply problems, never ever by monetary policy. I've been nice enough to provide some first-hand reports and a few pointers. I'm not your google. If you'd rather remain believing in Keynesian fairy tales, so be it.
• Jtsummers 9y ago
  Venezuelan hyperinflation began in 2015 [0]. Crude prices were on their way down at that point [1]. And Venezuelan oil production has been dropping continuously since 2006 [2]. The average reduction in production since 2006 was 3.17%. The overall reduction was 27.8% in that time period. Since I only found production numbers through 2016, you can see that there was an 8.85% drop in production between 2015 and 2016. If prices had stayed high the reduced production capacity wouldn't have hit so hard. If production capacity had stayed high the price drop wouldn't have mattered as much. Unfortunately they hit at the same time. The oil situation probably became the tipping point when compounded with their monetary policies and price control efforts. [0] https://tradingeconomics.com/venezuela/inflation-cpi https://tradingeconomics.com/venezuela/inflation-cpi [1] http://www.macrotrends.net/1369/crude-oil-price-history-chart http://www.macrotrends.net/1369/crude-oil-price-history-char... [2] https://ycharts.com/indicators/venezuela_oil_production https://ycharts.com/indicators/venezuela_oil_production (barrels per day, average across the year, goes through 2016)
  • lnino 9y ago
    So, 30% a year is just business as usual? Yes, oil hit then hard. But they already had pretty high inflation before. Not sure what counts as "hyper". Certainly having my salary go down 10% a year automatically is not a reasonable proposition.
    • Jtsummers 9y ago
      I agree with your general point, monetary policy was the cause of much of the inflation and had they not mismanaged their oil industry they may have been able to survive with the bad monetary policy much longer. And better monetary policy may have put them in a position to handle the issues in the oil industry. But the immediate need to print more money was the drop in production capacity and price, which is what led to the hyperinflation at the end of 2015 to present. Hyperinflation is usually very, very high inflation. Original definition was 50% monthly inflation (this would be 600% annual, higher actually since it would be compounding). 30% annual inflation isn't hyperinflation (though it's certainly not good, and after several years could be catastrophic on its own).