The Trajectory of Venezuelan Hyperinflation Looks Frighteningly Familiar...

Tyler Durden's picture

Extreme shortages of food and power continue to ravage the country of Venezuela, and ordinary people have been paying the price.

With triple-digit inflation, that “price” is expected to continue to soar even higher. The International Monetary Fund (IMF), in its most recent set April forecasts, expects inflation in Venezuela to hit 481% by the end of 2016.

Even scarier is the estimated pace of acceleration – by 2017, the IMF expects Venezuelan hyperinflation to climb to a whopping 1,642%.

Our brains have trouble computing numbers of this magnitude, so we created today’s infographic to put things in perspective. We look at it from two angles, including a historical comparison as well as a more tangible example.

 

Courtesy of The Money Project - an ongoing collaboration between Visual Capitalist and Texas Precious Metals that seeks to use intuitive visualizations to explore the origins, nature, and use of money.

 

This Pattern Looks Familiar…

If the chart for the Venezuelan bolivar looks eerily familiar, it may be because its trajectory thus far is almost identical to that of the Papiermark during hyperinflation in the Weimar Republic from 1918-1923.

Although the Papiermark would eventually peak at an inflation rate of 3.5 billion percent in 1923, the pace of inflation started relatively modestly. It started in the double-digits after the war in 1918.

This is similar to today’s bolivar. In 2013 and 2014, the pace of inflation in Venezuela was increasing, but still confined to double-digits. Now things are accelerating fast, and if the IMF is correct with its predictions, there could be huge consequences.

Could Venezuelan hyperinflation ever hit the peak levels associated with Weimar Germany? It’s hard to say, but it’s not impossible.

A More Tangible Example

To put things from a more tangible perspective, let’s do the math based on IMF projections to see what may be in store for ordinary Venezuelans.

  • In 2012, one U.S. dollar could buy approximately four bolivars.
  • At the end of 2015, one U.S. dollar could buy 900 bolivars at the black market rate.
  • Based on IMF projected inflation rates, by the end of 2017, one U.S. dollar should be able to buy 90,000 bolivars.

Where things go after that is anybody’s guess.

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Cognitive Dissonance's picture

A moment of silence please for the soon to be departed......fiat.

The bad news is it has gone parabolic. The good news it has gone parabolic and it will soon be all over.

<Soon being a relative term when you're hungry as hell and the kids are screaming.>

Muddy1's picture

You nailed it.  Thanks (I think).

My dad used to say, "Adults pretty much get what they deserve.  But why is it that the kids have to suffer the consequences of their idiot parents stupidity?"

Doom Porn Star's picture

"Adults pretty much get what they deserve.  But why is it that the kids have to suffer the consequences of their idiot parents stupidity?"

Parents do NOT have to rob their children.  Robbing children is a choice.

...& so are the reciprocal aged-adult shunning, abandonment -and patricide.

Don't steal from or engage in other ugly, oppressive and/or unwarranted behavior against your kids and they may not be forced to ignore, abandon, or dispense with you in response.

A parent's repsonsibilities towards their children is not infinite.

A child's responsibilities towards their parents is not infinite either...

Richard Chesler's picture

Socialism and gun control are great for common folks.

If you disagree you're a right winger redneck.

/sarc

Libtards are such fucking idiots.

 

D Nyle's picture

Cheaper than toliet paper, stronger and washable. So they need to quit complaining about no toliet paper

garypaul's picture

So, there's a whole bunch of countries in South America with a similar culture/background. One of them has a lot of oil and is a member of OPEC. That's the one that is experiencing hyperinflation. Coincidence? It's obvious to me that this has nothing to do with "socialism" bullshit spouted on ZH. This is clearly a takedown by somebody (no need to even mention who).

BarkingCat's picture

None of them are doing great.

It does not matter whether it is socialism or crony capitalism. Any system that rubs the productive people to enrich the leaches and put resources and modes of production control into the hands of unintelligent is doomed to fail.

Crony capitalism can have a longer life because many of the people running the enterprises are type A personalities that compete with others by nature. 

 

stacking12321's picture

" It's obvious to me that this has nothing to do with "socialism" bullshit spouted on ZH."

oh, it's obvious to you, is it?

so, perhaps you can enlighten us where you received your phd in venezuelan economics?

if you were paying attention, you'd know that as part of chavez's socialism he nationalized formerly productive businesses and drove them into the ground because the government didn't know how to run them (a hallmark of socialism).

also, you'd know that chavez's daugher now mysteriously has a net worth of $4 billion, how did that happen when she is just the daughter of a common man of the people? could it be that socialism is just the plunder of the wealth of the nation under the guise of "helping the common man"?

no doubt the usa has done what they can to destabilize and aggravate the venezuelan situation as that's what the usa does.

but if you can't see how venezuela has destroyed its own economy with its own socialist policies, then you're just denying reality.

GUS100CORRINA's picture

This kind of stuff are the things that make up an "AMERICAN NIGHTMARE". We (in America) are just as bad as Venezuela in many ways. When is the hammer going to drop and what shape will it be ... that is the question? EVERY AMERICAN FAMILY (OR VOTER) OWES MORE THAN 1,000,000 DOLLARS TODAY! JUST MAKES ME SICK.

Fourmyle's picture

Some notable differences that don't show just watching charts. The Mark was a widely held "safe" asset before the German inflation took off, and the flood of marks repatriating accelerated the collapse beyond what the financial experts could imagine. Not in common with Venezuela, but a potential feedback time bomb for USA .

Supernova Born's picture

Inflation only comes in supersize.

MontgomeryScott's picture

They can't seem to help it when 'inflation' happens. It's a 'natural urge', you know. Birds do it, bees do it; why can't you and they do it...

They thank you for the compliment, though (they didn't think it was THAT big, but if you think their 'size' is 'super', that gratifies them all the more).

I'll take a double Whammy burger, A supersize Whammy fries, and a diet cola (I'm trying to watch my weight). Yes, I understand that you're not serving breakfast any more, Sheila (how the hell did we get on a 'first-name' basis here? let me talk to your manager!).

https://www.youtube.com/watch?v=-eREiQhBDIk

rbianco3's picture

The $0.85 soda one fits inflation, not hyperinflation but funny shit.

How much for the soda, after he trashes the place because it was 85 cents?  Feef Tee Cents?

https://youtu.be/pk9IMyP85Ko

O C Sure's picture

USD crashes when it can no longer be exported.

The weimar and bolivar were not exportable.

...Lawrence Welk music, on and on.

Quantum Bunk's picture

yup

 

A the hyper feedback loop is something to behold. A store will double its prices. Then double the physical cash is needed to make the same purchase. So they have no choice but to print if they want commerce to exist. So even when they know it just makes it worse, they have to do it

Quasi's picture

Thank God, someone on ZH who realizes that Hyperinflation comes BEFORE the currency in circulation increases. Firing up the printing presses happens after the currency becomes worthless, not before. The currency tanks first because no one in their right mind wants to buy goods and services in an area governed by idiots of the highest caliber. Because said idiots don't understand economics in the first place, they think that they just need more of their worthless scrip.

O C Sure's picture

Quasimodo, ring that bell.

MontgomeryScott's picture

This argument of yours may indeed be quite valid.

In Venezuela's case, it's a moot point.

I DID read several published reports that the Venezuela COULDN'T print more TP (FIAT BOLIVARS) due to the fact that it didn't have enough 'money' to pay to print them (they outsource this task, apparently).

Printing MOAR is a response to the devaluation of the currency in circulation (hence, the TRUE definition of 'inflation', which has to do with the number of fiat currency thingies in circulation). What is CALLED 'hyperinflation' is actually 'hyper-devaluation' (the destruction of faith in the currency, and it's eventual demise as a means of trade). When CONFIDENCE is lost, the currency is no longer 'viable' (AHHH! It's a 'CON' game after all!).

 

In the case of a 'cashless society', the issue becomes far more complicated (add a few more zeroes on the end of the digital 'balance sheet', and VIOLA! MISSION ACCOMPLISHED!).

Farting angels out of their assets, and creating something out of nothing, the 'money masters' have started on the path of 'a higher level' of CON gaming.

AND, THE MONKEY/YENTA FLIPS THE SWITCH...

Archibald Buttle's picture

here's where things get murky to me. the amount of physical cash is a tiny fraction of the amount of 1s and 0s on a hard drive somewhere (hopefully?). we all know about ctrl-p of course, but if at some point they actually do fire up the real life printing presses so we can push our carts around full of worthless FRNs, will said worthless FRNs be replacing the 1s and 0s or be additional brand new debt tickets? oh wait, i just answered my own question i fear...

Ms No's picture

Scary stuff!  It's a good thing we have that terrorist security company that can make sure politically preferred Venezuelans can swamp the US unhindered and promptly get on California and federal welfare roles.

nmewn's picture

Stick em in a government subsidized apartment, provide a government subsidized Hoveround and stuff them full of EBT Moon Pies till they pop.

 

That'll fix em! ;-)

Ms No's picture

Then they pull the plug on the economy and they become a crazed zombie army, just add water or an empty EBT.  Then roll the US funded cartels and narco-terrorist agents across the border and we could become a war-torn shithole in a matter of weeks.  Don't think they wont do it either.  Taking down America would not be easy.  If this is what they are after they will have to bring in a whole lot of somebody.

MontgomeryScott's picture

(Future history book description)

Nobody who has studied the incidents that brought down the United States could definitively state any one cause. It may have been the multiple EMP weapons used by an unnamed 'rogue state', or it may have been the direct nuclear detonations in pre-planned locations which had been smuggled in by 'State actors' using bribes at the border checkpoints. Multiple scholars all agree that the 'open borders' policies were a contributing factor, and there seems to be some concensus as to the lack of the ability and/or will of the general populace to take back control of their 'government' while there was still time. When the 'SNAP' EBT electronic system stopped paying out altogether, approximately one-sixth of the population turned to violence, causing a civil war on all fronts, and the declaration of Martial law by acting president (add your name here) added fuel to the fire. The weaponized global WMD attacks, multi-pronged invasion, and subsequent collapse was swift (one of our scholars calls it a '21st century Blitzkreig'), as history has noted.

 

One of the weapons ALLEGEDLY used in the 'Orlando Pulse Nightclub' FALSE FLAG was a Sig Sauer 'MCX' (think Machine, Carbine, Experimental'). It comes with the ability to switch to 3 calibers at present (5.56 x 45, .300 BLK, and 7.62 x 39). The make a smaller version called 'MPX' (Machine, Pistol, Experimental). Currently, the only caliber is 9 x 19.

A BMG .50 caliber is great for 'long range' stuff, but the close-quarters weapons and fighters will be like (AHEM!) stink on shit (after the hit hits the fan, that is).

I suggest you prepare for the worst (bluffs and 'large words' won't stop what is coming, and attrition will be taking a terrible toll).

The guy's Dad actually ran for President of Afghanistan, you know (the 'ONE' that the media states was involved). THERE WERE AT LEAST THREE OTHERS (along with their State Sponsors HERE in occupied CONUS).

Good luck to you, Ms. No.

Scott out.

nmewn's picture

Bernie! Ber-nie! BERNIE!!! ;-)

alexcojones's picture

That last TALL bar graph looks eerily like the WTC Twin Towers

90% of Americans have no clue about the economy or 9/11

WATCH: Imploded Casino Collapses Just Like WTC7 on 9/11
Kina's picture

In sure and certain hope of the resurrection to eternal fiat life through our Yellen, we commend to gold our brother fiat bolivar; and we commit its digital zeros to the Blue Screen of Death; earth to earth; ashes to ashes, fiat to fiat. The Yellen bless it and keep it, the Yellen make her face to shine upon it and be gracious unto it and give it peace. Amen.

MontgomeryScott's picture

In the original movie screenplay of Pierre Bolle's novel 'Planet Of The Apes', the character played by Charlton Heston is forced to watch as the mutants carry on with a religious service, praying to The Holy Bomb. It sounds like you plagurized the script from that scene.

I didn't watch this one in the theater. I think it was an ABC 'Movie Of The Week', a couple of years after it came out. 'We reveal our true faces to You', or something like that...

Did you ever see this movie?

 

Micheal Savage has taken to calling her 'Janet Yenta'. Frankly, with her short round stature and Bronx accent, I call her 'Troll thing'.

I got eggs for sale (150 FEDRES per dozen), if you're TRULY HUNGRY.

Wilcox1's picture

Why do they keep on printing money?

carbonmutant's picture

At some point the cost of the paper is more expensive than the denomination of the note.

HRH of Aquitaine's picture
HRH of Aquitaine (not verified) carbonmutant Jun 15, 2016 8:21 PM

There was an earlier article about the company that makes the paper for the Bolivar refusing to send them any more paper because Venezuala hasn't been paying them for the paper.

CHX's picture

I do have a 500 B banknote from the German hyperinflation in my desk. What they did is they stamped 500 B in red ink over an "old" 100 Reichsmark note and TADA - they printed 499 999 999 910 RM... History may not repeat but it often rhymes... M. Twain was onto something.

BullyDog's picture

Here son, nearly all the americans & british laughed at this event after Chavez died, blaming him for all the woes.  That stupid gold that he demanded back from the bullies.

 

Bide your time karma, bide your time.

yogibear's picture

Central banksters are playing the same games of theonce great societies. 

They printed themselves out existence.

Once has to wonder why the Germans wanted their gold back from the Federal Reserve. They know that the Fed will just keep flooding with paper until they get the massive inflation and a currency crisis.

thinkmoretalkless's picture

The three GGG's. Gun, Gold and a Garden

Archibald Buttle's picture

+100 TMTL, i am soooo gonna borrow that. its a sound bite to help educate the overly-edumacated sheeples who can only grasp sound bites. kudos!

American Psycho's picture

how much are hookers in bolivar?

Zero_Ledge's picture

I've been watching the black market rate on dolartoday.com, and it hasn't budged from 1055 for almost a month. I think it peaked around 1100.  Anyone care to comment?  Is there a better source for the "real" exchange rate?  Oil price increases have alleviated some pressure, but still the rate should at least be fluctuating somewhat.  I think the IMF projections are useless; any actual data would be appreciated.

 

rbianco3's picture

On a serious note... is it possible that hyperinflation will come to America?

I was talking with my wife, she said she was using some of my emergency storage and I got pissed told her that hyperinflation is coming and that she's going to be paying $1 trillion for something that costs $1 now. She said bullshit. I said maybe that's an exaggeration, what do you think?

With Gold & Silver breaking serious resistance $1,300 and silver soon $18 - I'm afraid the end is near, is anyone else afraid or do we have ten or twenty more years? 

 

Archibald Buttle's picture

to paraphrase some olde tymey stuffed suit: shit can go crazy for longer than you can stay solvent.

rbianco3's picture

I apologize for this extremely important OT comment - nowhere else to leave it. Disregard if not interested

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BritBob's picture

Aren't there enough things for Maduro to fix at home rather than get involved with foreign sovereignty claims? https://www.academia.edu/21721198/Falklands_1833_Usurpation_and_UN_Resol...