Zero Hedge recently wrote:
“Back in February, we commented on the unprecedented hyperinflation about to be unleashed in the Venezuela whose president had just announced that he would expand the “weekend” for public workers to 5 days.
“About the same time, the WSJ announced that, ‘millions of pounds of provisions, stuffed into three-dozen 747 cargo planes, arrived in Venezuela from countries around the world to service Venezuela’s crippled economy. But, instead of food and medicine, the planes carried another resource that often runs scarce there: bills of Venezuela’s currency, the bolivar.’”
“The 747 cargo shipments were part of the import of at least five billion bank notes as the government boosts the supply of the country’s increasingly worthless currency.”
“More planes were coming: in December, the Venezuelan central bank began secret negotiations to order 10 billion more bills which would effectively double the amount of cash in circulation [and thereby also reduce the real value (purchasing power) of Venezuela’s national debt by 50%]. That order alone is well above the eight billion notes the U.S. Federal Reserve and the European Central Bank each print annually—dollars and euros that, unlike bolivars, are used world-wide.“
Yes, it’s true that the U.S. dollar and the EU’s euro are different from the Venezuelan bolivar in that dollars and euros are “world reserve currencies” that are recognized and “used world-wide”. The bolivar, on the other hand, is primarily a “local” currency used and recognized almost exclusively within Venezuela.
However, it’s also true that dollars and euros are also virtually identical to Venezuela’s bolivar in that all three currencies are fiat, debt-based and intrinsically worthless. That equivalence is nothing to sneer at.
Why? Because dollars and euros might do better than bolivars today, but that won’t always be so. Venezuela is giving the world yet another lesson on the inevitable fate of fiat currencies: hyperinflation and national ruin.
• Zero Hedge:
“Where things got even more ridiculous for the Venezuelan government is how much physical currency was needed, and the cost to print it:
“The high cost of the printing binge is an especially heavy burden as Venezuela reels from the oil-price collapse and 17 years of free-spending socialist rule that have left state finances in shambles.
“Most countries around the world have outsourced bank-note printing to private companies that can provide sophisticated anti-counterfeiting technologies.”
What’s so bad about counterfeiting?
If government really wants to print more fiat bolivars to cause more inflation, why pay some foreign printer to produce the additional, intrinsically-worthless notes? Why not simply allow the Venezuelan people to print their own intrinsically-worthless 100-bolivar bills on their home computers and spare government the cost of printing more fiat currency?
Why is an intrinsically-worthless bolivar printed by a foreign printer more valuable than an intrinsically-worthless bolivar printed on some Venezuelan’s home computer?
• Here, in the U.S., rather than rely on the Federal Reserve to print hundreds of billions of intrinsically-worthless, fiat dollars to stimulate the economy—why not repeal the anti-counterfeiting laws and allow private Americans to print our own $100 bills on our own computers? It would save government the cost of ink and paper and also eliminate the costs of distributing “helicopter money” to Americans
Why should intrinsically-worthless paper dollars printed on my computer be disdained while virtually-indentical intrinsically-worthless paper dollars printed by the Federal Reserve be admired? Couldn’t my intrinsically-worthless “counterfeit” dollars be held in the same high regard as the Fed’s intrinsically-worthless “real money”?
Conversely, shouldn’t the Fed’s intrinsically-worthless “real money” be viewed with the same disdain as my intrinsically-worthless, counterfeit fiat dollars?
The answer to these seemingly ridiculous questions is simple: If government allowed Americans to print and use their own “homemade” dollars as if they were every bit as valuable as the “official” fiat dollars printed by the Federal Reserve, the public would soon see that the Fed-printed dollars are just as worthless as those printed with home computers.
Counterfeiting laws exist to deceive people into believing that “officially-printed” fiat dollars are somehow more valuable than “unofficially-printed” fiat dollars.
The truth is that the fiat dollars printed by the Fed are no more intrinsically valuable than the “counterfeit” fiat dollars that could be printed on home computers. If people understood that truth, their confidence in the “officially-printed” fiat dollars would fall—perhaps enough to kill the fiat dollar. If that were to happen, Americans would find themselves in circumstances virtually identical to the current circumstances in Venezuela.
• Zero Hedge punch line:
“The Venezuelan central bank’s own printing presses don’t have enough security paper and metal to print more than a small portion of the country’s bills.”
Here in the US, it costs about 5 cents to print a new $100 bill. Such a deal, hmm? For about a nickel’s worth of paper, ink and labor, you can produce a $100 bill. It’s like having a proverbial money tree. Unless we run out of nickels, we can produce an infinite and endless pile of fiat dollars.
Well, Venezuela is so broke that it can’t come up enough “nickels” to print more 100-bolivar notes. This is as laughable and tragic as a check forger who’s starving to death because can’t find a pen to forge someone else’s signature on a stolen check to pay for his food.
In a sense, Venezuelans are starving for lack of enough paper and ink to print more intrinsically-worthless bolivars.
But this is not a uniquely Venezuelan problem. This is a problem that’s inherent in all fiat currencies—including the euro and U.S. dollar.
If you stop long enough to really look at our current monetary system, you’ll see that the whole thing is crazy and/or wicked.
Why? Because every fiat monetary system inevitably leads to chaos and death.
• Zero Hedge:
“Venezuela’s difficulties stem from the same dollar shortages that have plagued Venezuela’s centralized economy, as the Maduro administration struggles to pay for imports of everything, including cancer medication, toilet paper and insect repellent to battle the mosquito-borne Zika virus.”
Venezuela depended on fiat dollars to pay its bills for imported goods and services because, while foreign producers would accept fiat dollars as “payment” for their goods and service, they would not accept Venezuelan bolivars. Even though Venezuelan bolivars are just as intrinsically worthless as U.S. fiat dollars, the world has been deceived into using fiat dollars to pay for their imports. Why? Because, since WWII, foreign sellers have been conditioned to accept fiat dollars as if they were “good as gold”. The primary reason the world accepts dollars as “payments” is habit. That’s it. Habit, based on the dollar’s former value. But today’s habitual acceptance of fiat dollars has virtually nothing to do with the dollar’s current value.
Venezuela thereby became dependent on selling its crude oil to the US and other foreign countries for US dollars. As long as Venezuela had a continuous influx of US dollars paying for Venezuelan crude oil, Venezuela had enough US dollars to purchase whatever they wanted to import.
• But note that Venezuela relied primarily on selling natural resources (crude oil) rather than on its people’s hard work and industry to trade for fiat dollars and/or for imports.
Result? Venezuela became over-populated with leftists, socialists and communists who really believed that there was no need for them to work because they were entitled to simply pump wealth out of the the ground as crude oil.
But. Surprise, surprise! Venezuela’s communist government kept contending with the US government until the US government and/or the global crude oil supply glut started to restrict the sale of Venezuelan crude into the US markets.
Result? Less fiat dollars for the Venezuelans to spend on products imported from foreign countries rather than made in Venezuela by the Venezuelan people. Insofar as the Venezuelan people didn’t need to work and be productive (they could import their needs from foreign countries and pay for those imports with exported Venezuelan oil), they lost much of their capacity to work and produce.
Relying on food and goods produced in foreign countries, they lost their capacity to grow their own food and produce their own products. Now, unable to sell Venezuelan crude for fiat dollars and therefore unable to purchase foreign-grown food, Venezuelans have begun to starve. Some of them are already hunting and eating dogs, cats, pigeons and rats. Soon, some Venezuelans will be secretly hunting and eating other Venezuelans. This is the ultimate fate of every collectivist government that teaches its people that they’re “entitled” to eat without having to work to grow and produce food.
Plus. The US started fracking and pumping its own oil again and thereby increased the global supply and cut the price of crude oil—which also reduced Venezuela’s access to fiat dollars.
Plus. Saudi Arabia started a global price war which slashed the price of crude from over over $100/barrel to $26/barrel.
Result? In a classic tribute to leftist politicians everywhere and to all people who think they’re “entitled” to survive without working, the idiotic/Satanic Venezuelans who thought they didn’t need to work have seen their nation torn apart and ruined.
Plus. Insofar as Venezuelans have become ingrained with the idea that they can live off their “entitlements” rather than their productivity, many Venezuelans no longer know how to work. If Venezuela wants to become prosperous, it won’t be enough to send them financial aid. Somebody’s going to have to teach the Venezuelan people how to work and why to work.
That means they’ll be forced to abandon their leftist philosophy. That means there’s a revolution coming to Venezuela. The same fate could befall any other nation that relies on fiat currencies.
• Like Greece and France, a majority of Venezuelans subscribe to the leftist notion that they can “have it all” without having to work. They’re insane. They deserve the Muslims.
Being leftists and evolutionists, they’re about to be very surprised when they learn that the forces of natural selection are still in full force and effect. As a result, many of the Venezuelans who believed in collectivism and “entitlements” (free lunches) are about to be “selected out” for being stupid, delusional and parasitical.
Venezuelans (and U.S. citizens) will regain their sanity and prosperity when they re-learn and grudgingly respect a universal truth: none of us are “entitled” to one damn dime that we haven’t personally earned.
• Zero Hedge:
“Reportedly, the Venezuelan central bank’s latest orders have been exclusively limited to only 100- and 50-bolivar notes because 20s, 10s, 5s and 2s are worth less than the production cost.”
Sounds hilarious, no?
The poor, misguided Venezuelan peasants have supported a communist regime that’s produced a paper currency that’s so worthless, that they can’t even afford to print the smaller denominations. If the Venezuelan people are dumb enough to keep their communist government in power, it’s only a question of time before the leftists are forced to print trillion-bolivar notes that are every bit as worthless as Zimbabwe’s trillion-Zimbabwean-dollar notes of the recent past.
Similarly, insofar as Americans continue to support the US government that gave us a fiat currency, Americans will also soon follow the same hyperinflationary trajectory that’s pushed Zimbabwe and now Venezuela into chaos and possible national destruction.
• Zero Hedge:
“In late December, President Maduro changed a law to give himself full control over the central bank, stripping congressional oversight just as his political opponents took control of the National Assembly for the first time in 17 years.”
“Sadly, that did nothing for the imploding economy and country, whose morgues are now overflowing due to rampant social violence.”
“Sadly . . . morgues are now overflowing”?
There’s nothing “sad” about it.
Of course, any death is arguably “sad,” but in this case, use of the word “sad” doesn’t clearly apply. They should’ve written, “Predictably, . . . morgues are now overflowing,” or “Inevitably, . . . morgues are now overflowing.”
There’s nothing “sad” about dead bodies piling up in Venezuelan morgues. Those deaths (and more to come) were predicable and guaranteed on the day Venezuelan’s voted to become a leftist, collectivist society.
It’s not like Venezuelans are dying because of an earthquake, tsunami or some new pathogen. They’re dying because they voted to become a communist country. Whether they knew it or not, they voted to die and now they’re dying–what’s “sad” about that?
Remember what I wrote previously about “natural selection”? The stupid, suicidal leftists are killing each other in Venezuela in a gross act of natural selection. They’re filling their morgues with the victims of natural selection. Natural selection is what you see when you stop working. Nature not only abhors vacuums, it also abhors parasites and/or those who voluntarily serve as parasites’ hosts. If you can’t produce, your odds of dying an early death rise dramatically.
Want a good job in the last years of any communist/collectivist society?
Become a mortician, undertaker, coffin maker, body disposal expert or grave digger. The work’s not glamorous, but it’s steady. So long as leftists rule, you won’t be unemployed. Collectivism inevitably ends in wide-spread, violent, self-destruction.
Get in on the ground floor now! Learn to become a grave digger!
Build a better (cheaper) coffin and the leftist world will beat a path to your doorstep!
Why do leftists governments lead to national suicide? Because leftists don’t know how to work and are therefore incapable of generating the productivity that’s required to supports any viable nation. The leftist mantra (“From each according to his ability; to each according to his need.”) explains the problem. In a leftist world, the able are robbed of productive efforts by the parasites who feel “entitled” by their mere needs and wants. If you don’t want to be robbed, don’t be productive. If you want to prosper, focus on your needs rather than your abilities. The result of the leftist mantra is an inevitably unproductive and impoverished nation.
Because the left takes rather than produces, leftists ultimately have only one option when facing unemployment and starvation: the violence of theft, robbery, and if necessary, murder. They’re too ignorant, unintelligent or lazy to work their way out of their problems with productive effort. Unable to produce, they’ll steal or die.
• Much the same thing happened to the former Soviet Union when it collapsed circa A.D. 1991. The communist people, no longer knowing how to work productively and relying on “Big Brother” for their support, resorted to violence and criminality on a national scale as they tried to steal (rather than produce) whatever they needed or wanted. That theft was sanctioned by the leftist government.
We see something similar in the U.S. where many blacks (who, thanks to welfare and the notion of “entitlements,” no longer know how to work) often have only two ways of surviving: government hand-outs or violence.
Soon, we’ll see the same thing among white welfare recipients who, when deprived of government hand-outs, will be forced to steal or die.
• If you want to survive in this world; If you want to prosper—you’d better learn now how to work hard and work smart to produce something tangible that other people freely want and value.
Just as Venezuela’s morgues are overflowing due to national poverty and violence, at some future date, American morgues will also overflow with government dependents who don’t know how to work or why they must.
As I wrote previously, the bodies clogging the Venezuelan morgues aren’t “sad”. Why? Because those bodies were predictable. They were as certain and inevitable as rigged, leftist elections.
Venezuela sealed its fate when it voted for a collectivists government. They’re just getting what they voted for–including a central bank that doesn’t have enough paper and ink to print more fiat , 100-bolivar bills.
Is it really “sad” when stupid, greedy people get exactly what they voted for?
What have Americans voted for since WWII? Personal responsibility and productivity–or “entitlements”?
What are “entitlements” all about?
They’re about the idea that the non-productive are legally “entitled” to rob the productive. They’re about a complete lack of respect for property values. If they left respected property values, they’d have to respect the producers’ rights to keep whatever they’d produced. Instead, in order to win the support of the non-productive, the left claims the productive have no meaningful rights to keep whatever they’ve produced. Result? Producers start asking why they should bust their hump to produce enough goods to satisfy the needs of the non-productive. Producers disappear. Next, the non-productive parasites and crooks begin to starve, die and clog up the morgues.
What’s so “sad” about that? People are just getting what they voted for. What goes around, comes around. Just like real life.
• So, what are you going to vote for next November? Increased productivity and more property rights? Or increased entitlements for the poor and increased subsidies for the rich and less property rights?
Of course, if you want to vote for the Left, now would be a good time to invest in coffin manufacturers because, if a few more years, we’ll need lots of coffins. Vote left and die. Not immediately, but soon enough.
Which way are you voting? Left or Right?.
And, while the Democratic Party is clearly an agent of the “leftists,” don’t suppose that I advocate the Republican Party as the champion of the “Right”. The difference between the Democrats and the Republicans is, in most regards, similar to the difference between the communists and the socialists.
Which politicians are really for increased productivity and increased property rights? If you can find such candidates (and they are rare), they’re the ones who really represent the “Right”.