“The fundamental objection advanced against the practicability of socialism refers to the impossibility of economic calculation. It has been demonstrated in an irrefutable way that a socialist commonwealth would not be in a position to apply economic calculation. Where there are no market prices for the factors of production because they are neither bought nor sold, it is impossible to resort to calculation in planning future action and in determining the result of past action. A socialist management of production would simply not know whether or not what it plans and executes is the most appropriate means to attain the ends sought. It will operate in the dark, as it were. It will squander the scarce factors of production both material and human (labour). Chaos and poverty for all will unavoidably result.” -Ludwig von Mises
Venezuela was once touted as a socialist paradise, a completely planned economy that relied on its oil revenue (50% of total GDP, and 95% of total exports!) to fund “socialist” programs for its citizens. Unfortunately, with oil prices plunging, Venezuela has had problems planning its economy; inflation is up 65% and murder rates are the second highest in the world. The above video is one of many that show the recent spate of looting in stores as people desperately fight for toilet paper, among other basic necessities, because their savings have been inflated into worthlessness. It highlights the problem with a society where money is becoming worth less than the paper it was printed on.
This problem is not merely endemic to openly “socialistic” economies like Venezuela; all economies that have the “socialistic” inclination of controlling the economy, pretending that THEY know better than the PEOPLE, by printing record quantities of paper and debt to “stimulate” via the “wealth effect” (making the rich richer via funding stock-purchases and buy-backs that drive up share prices) will soon find themselves in a similar boat. At least the people of Venezuela got something when the getting was good… In other countries, wealth inequality has sky-rocketed before hyperinflation has even had a chance to sink in.
Venezuela is tanking because of lower oil prices. Oil prices are low because demand from China is low due to reduced manufacturing and its tanking economy. China is tanking, and manufacturing less because the people of its biggest client, the USA, are NOT feeling a recovery of any kind — disregard the pep-talk about a “recovery” that the talking heads tried so hard to sell us over the last two years.
So far we have seen two links in that chain fall, but both falls come as a consequence of the prior fall of the third chain… the US’ and much of the developed worlds’ middle classes are hurting.
Zero Hedge wrote a telling piece:
“Venezuela’s hyperinflation is reaching its final stages. It is probably already far too late for the government to stop the complete collapse of its currency. The bolivar is in the process of transforming from a medium of exchange to tinder for wood-stoves. Venezuelans who had the presence of mind to convert their savings into gold or foreign currency in good time are likely to survive the conflagration intact.
Those who bought stocks on the Caracas stock exchange seem to have successfully side-stepped the effects of the devaluation as well, but they need a plan for the post-inflation adjustment crisis, which will bankrupt a great many companies very quickly. Also, the government can simply close the market down at any time if it doesn’t like what is happening there, so there is the ever-present danger of even more government interference as well.
It is quite fascinating to see that in spite of numerous examples throughout history, governments never seem to learn. They all believe they can somehow overrule economic laws by diktat. This is not only true of Venezuela’s government, but of practically every government in today’s world. Central planning of money has been adopted everywhere. Venezuela merely shows us what the end game for every fiat money system looks like.
At some point the State is overwhelmed by the promises it has made to its citizens. When it can no longer pay by means of confiscating private wealth, the printing press is always the last resort. Recently one actually gets the impression that it is often the first, rather than the last resort.
In developed countries, people believe that the planners have everything in hand, and that their “price stabilization” rules will protect them from such outcomes. However, it should be clear that these rules will simply be abandoned in extremes. The independence of central banks exists only on paper – it will mean nothing in a perceived “emergency.““
People have come to understand just how corrupt their systems are, particularly in the US where everyone seems to understand the open-bribery that seems to occur between their politicians and the corporations via “election campaign funds” and “speaking arrangements.” It is a little strange then to see that people yet trust these sociopaths in power to have their best interests at heart when it comes to their quality of life, and the value of their money…
Who am I kidding? Clinton, Bush or Trump are probably going to get voted in over the relatively honest politicians anyway. Then when looting occurs at Walmart they can blame worsening race-relations or something…
This Article (The First Domino Falls: Looting In Venezuelan Stores As Hyperinflation Takes Hold) is free and open source. You have permission to republish this article under a Creative Commons license with attribution to the author and AnonHQ.com.