The Fall of the Venezuelan Economy

The New Venezuela

Q:  How many Venezuelan bolívars does it take to buy an ounce of gold?

A:  Who cares?

It’s a good joke because no one we know, or can reasonably imagine, would be willing to trade perfectly good gold for bolivars, knowing full well that the bolivars taken in exchange today will likely be worth much, much less tomorrow.

But the condition of the Venezuelan economy and the suffering of the Venezuelan people is hardly the stuff of jokes.  It is a human horror story only made worse by the fact that it is not the result of some unavoidable natural disaster like a flood or an earthquake.  The deprivation forced on the country’s 32 million people is manmade.  It was entirely foreseeable.  And entirely unnecessary.  

It is the inevitable consequence of policy choices made by Venezuela’s autocrats Hugo Chavez and Nicolas Maduro and their henchmen of the left.  

Actually, as an exercise only, a price for gold in Venezuela could be established by calculating the “official” bolivar/dollar exchange rate and applying it to the dollar price of gold.  In that case, you could come up with a gold price somewhere in the neighborhood of 323,000,000 bolivars per ounce.

But even that price is fraudulent since the official currency we are using to make this calculation was itself the lowest valued currency in the world and last August was replaced with a new bolivar at an exchange rate of 100,000 of the old bolivars for one new one.

Currency prices calculated in millions, billions, and trillions and monetary units that have been subject to exchanges and replacements reveal the ruination of a country.  It is a fascinating field for monetary archeologists, like digging through the ruins and artifacts of ancient civilizations.  

But no history of economic ruin or catalog of its inevitable economic failure is ever enough to demonstrate to ideologues that socialism is the pathway to calamity.  Not the decades of contrast between East and West Germany.  Not the differences in living standards between North and South Korea.  Not the Soviet failures or the experiments of Pol Pot and Fidel Castro. 

Not the prolonged suffering of Venezuela.

Nothing looks likely to stop the socialist juggernaut in the United States.  It has begun to take hold in a manner frightful to behold.

In a forthcoming commentary I will have more to say about the prominent figures of the modern American socialist movement, politicians like Alexandria Ocasio-“Chavez”-Cortez, New York Mayor Bill “Hugo” de Blasio, and Elizabeth “Maduro” Warren.  

Their prominence and the spread of socialist ideas is a really good reason to start attending to your precious metals portfolio today.  The left is determined that America should tread the path of socialism and become the next Venezuela.   Socialism’s manifest failures are not enough to dissuade them from trying to tank what is left of our prosperity and charting a ruinous course for Americans.  

Millions of impoverished Venezuelans wish they had transferred their wealth into gold and silver while they still could.  Before their Hugos and Maduros took over.

Alas, it is too late for them.  But not for you.