3 ms·

Right now the official rate is Bs.6.3 per dollar. The black market rate is just getting to Bs. 50/$. Thats one of the reasons we are set to have a 50% inflatio

by rafaelm 13y ago

Right now the official rate is Bs.6.3 per dollar. The black market rate is just getting to Bs. 50/$. Thats one of the reasons we are set to have a 50% inflation rate this year. My monthly salary has withered away and as an engineer I'm making just over $200/mo.

pmelendez 13y ago
Fellow Venezuelan here (although living outside of the country right now) I have hard times explaining to people how the economy works over there. Most people overestimate how harmful is a regime under foreign currency exchange control. But some metrics like the big mac index (http://www.economist.com/content/big-mac-index http://www.economist.com/content/big-mac-index) can give a rough idea of what is happening.
- warseph 13y ago
  In Argentina the Big Mac's price is actually regulated by the government (http://www.slate.com/blogs/moneybox/2012/05/01/why_big_macs_are_cheap_in_argentina.html http://www.slate.com/blogs/moneybox/2012/05/01/why_big_macs_... the prices shown in that menu are about double now, except for the big mac, which is still ~30 pesos). Just another example of how much our government controls metrics here. I'm surprised the same thing doesn't happen in Venezuela, though, as Cristina Fernandez seems to have copied almost her entire "economy model" from Chavez's.
  - pmelendez 13y ago
    Well is hasn't been regulated yet because it is an "imperialist" product hence it is a luxury. But most products are regulated in Venezuela too, and those products are scarcity now because nobody likes to produce without profit and there is not enough money to subsidize all of them and cover the whole demand.
  - rafaelm 13y ago
    McDonald's has become so expensive here in the last months that it's sometimes cheaper to eat in a relatively decent restaurant. I don't eat in McD but a friend recently had a chicken sandwich, fries, coke and a sundae for close to Bs. 180. It's rid.iculous. At the official rate that's around $30. But at the black market rate that's under $4. Same goes for clothing, electronics, etc. It seems argentina didn't learn from their past hyper inflation or from Venezuela's economic problems...
    - missing_cipher 13y ago
      $180 doesn't sound right. One of the most expensive combos (say an Angus Tasty or something) is around $90ARS.
      - pmelendez 13y ago
        Bolívares.not $ ... As he said, using the official rate it would be $30
- rafaelm 13y ago
  The distortions these kind of controls generate cannot be explained to someone who lives in a normal economy. Here in Venezuela, it's much better to go in to debt (get loans to buy stuff like refrigerators, TVs, etc) than to use any unexpected or larger than usual income to pay off your debts because of the high inflation rate. Only in Venezuela can a car cost more the minute you drive it out of the dealerships (if you can find them), than in the showroom floor.
  - pmelendez 13y ago
    >"Here in Venezuela, it's much better to go in to debt (get loans to buy stuff like refrigerators, TVs, etc)" That is pretty much true in most countries but for different reasons. Over there, inflation rate is usually higher than the controlled interest rates. On the other hand, in other countries stores give you cheap loans to impulse sales. In any case I am agreed with you that you have to spent some time over there to understand the distortion of a economy with a high inflation. Also you would understand how easy is for a government to manipulate economic metrics and give a different impression from outside the country.

by rafaelm 13y ago

pmelendez 13y ago

Fellow Venezuelan here (although living outside of the country right now) I have hard times explaining to people how the economy works over there. Most people overestimate how harmful is a regime under foreign currency exchange control. But some metrics like the big mac index (http://www.economist.com/content/big-mac-index http://www.economist.com/content/big-mac-index) can give a rough idea of what is happening.

warseph 13y ago
In Argentina the Big Mac's price is actually regulated by the government (http://www.slate.com/blogs/moneybox/2012/05/01/why_big_macs_are_cheap_in_argentina.html http://www.slate.com/blogs/moneybox/2012/05/01/why_big_macs_... the prices shown in that menu are about double now, except for the big mac, which is still ~30 pesos). Just another example of how much our government controls metrics here. I'm surprised the same thing doesn't happen in Venezuela, though, as Cristina Fernandez seems to have copied almost her entire "economy model" from Chavez's.
- pmelendez 13y ago
  Well is hasn't been regulated yet because it is an "imperialist" product hence it is a luxury. But most products are regulated in Venezuela too, and those products are scarcity now because nobody likes to produce without profit and there is not enough money to subsidize all of them and cover the whole demand.
- rafaelm 13y ago
  McDonald's has become so expensive here in the last months that it's sometimes cheaper to eat in a relatively decent restaurant. I don't eat in McD but a friend recently had a chicken sandwich, fries, coke and a sundae for close to Bs. 180. It's rid.iculous. At the official rate that's around $30. But at the black market rate that's under $4. Same goes for clothing, electronics, etc. It seems argentina didn't learn from their past hyper inflation or from Venezuela's economic problems...
  - missing_cipher 13y ago
    $180 doesn't sound right. One of the most expensive combos (say an Angus Tasty or something) is around $90ARS.
    - pmelendez 13y ago
      Bolívares.not $ ... As he said, using the official rate it would be $30
rafaelm 13y ago
The distortions these kind of controls generate cannot be explained to someone who lives in a normal economy. Here in Venezuela, it's much better to go in to debt (get loans to buy stuff like refrigerators, TVs, etc) than to use any unexpected or larger than usual income to pay off your debts because of the high inflation rate. Only in Venezuela can a car cost more the minute you drive it out of the dealerships (if you can find them), than in the showroom floor.
- pmelendez 13y ago
  >"Here in Venezuela, it's much better to go in to debt (get loans to buy stuff like refrigerators, TVs, etc)" That is pretty much true in most countries but for different reasons. Over there, inflation rate is usually higher than the controlled interest rates. On the other hand, in other countries stores give you cheap loans to impulse sales. In any case I am agreed with you that you have to spent some time over there to understand the distortion of a economy with a high inflation. Also you would understand how easy is for a government to manipulate economic metrics and give a different impression from outside the country.