This Is What The Death Of A Nation Looks Like: Venezuela Prepares For 2,300% Hyperinflation

Back in January 2016, we showed what the collapse of Venezuela looks like, when in addition to charting Venezuela's imploding currency (which back then was trading at a positive expensive 941 bolivars to the dollar), we presented what at the time was the IMF's latest Venezuela inflation forecast, which stunned us as it surged from 275% in the just concluded 2015 to a whopping 720% at the end of 2016.

Fast forward nearly two years until today, when the IMF released its latest estimate of what it believes will happen to Venezuela's economy in the coming year and a half. What is striking, besides the fact that Venezuela has somehow still managed to avoid bankruptcy, is that the IMF now expects Venezuela's hyperinflation to reach a staggering 2,349% in 2018, after rising by "only" 626% this year, the highest estimate for any country tracked by the IMF. While the South American country stopped reporting economic data in 2015, the IMF estimates that last year inflation clocked in around 254%, a number which is set to soar in the coming years for obvious reasons.

At the same time as residents scramble to find alternative currencies to the local paper which will lost all of its purchasing power over the next year, the IMF predicts the “intensification of the political crisis in Venezuela” will lead to a further decrease in economic output. As a result, GDP is expected to shrink 6% in 2018, after dropping an estimated 12% in 2017.

And, as oil production declines and uncertainty increases, unemployment is forecast to increase to about 30% in 2018, also the highest and followed by South Africa’s 28% and Greece’s 21% .

As Bloomberg adds, the Bolivarian Republic isn’t current with most of its key economic statistics, leaving economists scant data to crunch.

Of course, a far better indicator of the hyperinflation in Venezuela is not some forecast from the always wrong IMF, but what is taking place on the country's currency black market, where as of today, 1 dollar buys 26,808 bolivars on the black market, up from 3,164 at the start of the year, or a nearly 9-fold loss in purchasing power in under a year.

Before Venezuela’s new legislative super body took over the functions of the country’s only remaining opposition-run institution this year, the sidelined National Assembly had started publishing its own inflation index due to the lack of official data. Bloomberg’s Cafe Con Leche Index puts the annual rate at 650%.

Meanwhile, as we wait for the long-overdue Venezuela bankruptcy, here is a photo of an empty carton of eggs sitting on an empty shelf at a supermarket in the Chacao district of Caracas: the sad culmination of every socialist regime.


SokPOTUS SafelyGraze Tue, 10/10/2017 - 21:36 Permalink

....and shopkeeper after shopkeeper jailed for failing to stock the shelves with eggs that are now impossible to purchase since the chicken farmers had to eat their livestock one a a time to avoid starvation.

And if imprisonment doesn't work to get eggs on the shelves, perhaps the death penalty will work on shopkeepers who fail to stock the non-existent eggs.


In reply to by SafelyGraze

38BWD22 Tue, 10/10/2017 - 17:26 Permalink

  Gold, Bitcoin and even US$ can help Venezuelan individuals hedge against that hyperinflation. That chart shows inflation is exponential there.  Very dangerous.  Maduro is probably on his way out.  Not even the army will support before long.

Lore 38BWD22 Tue, 10/10/2017 - 19:07 Permalink

@ Tyler:Please stop parroting that lame, authorized "socialism" excuse.  It's about as incisive as the "lone gunman" script for what happened in Vegas.  You're better than that.Symptoms may differ with each iteration, but this is merely the latest country in a long line:VENEZUELA REGIME CHANGE PROJECT"When the U.S.A. wanted a regime change, it used to be done in secret by the Central Intelligence Agency (CIA), especially when that country had a democratically elected government such as Iran (1953), Guatemala (1954), Chile (1973), Nicaragua (1980’s), Haiti (2006), Honduras (2009), Ukraine (2014) and Syria, where the bloody project is still raging, the body count mounting, and millions of refugees are homeless. In the last few decades the U.S. has grown bolder in its regime change projects. What used to be done secretly is now unabashedly done in plain sight. The 2017 Venezuela regime change project has gone public....The U.S. wants Venezuela to embrace neoliberalism so that international mega-corporations can exploit its oil, which is the largest proven reserve in the world.Secretary of State Rex Tillerson, the former CEO of Exxon, wants to see his former employer get in on the profits, instead of profits being invested in Venezuela’s people.When is the public ever going to get it that the U.S. does not care about democracy, human rights, the deaths of innocent civilians and those widowed, orphaned and made homeless by U.S. stoked wars? They want the oil.

In reply to by 38BWD22

steve2241 Tue, 10/10/2017 - 17:27 Permalink

It wasn't that too long ago that similar rates of inflation were widespread throughout Latin America.  The entire region will soon revert to their ignominious roots.

pound the vix Tue, 10/10/2017 - 17:35 Permalink

So here is the real question.  If you lived in Venezuala and were "smart" and bought gold with some of your money over the years, could you now use that gold to live?  Or would you be killed or arrested the second someone finds out you have gold??  Yes, of course you can try and flee your homeland with your stash.  but can you remain home and use the gold you wisely have in a hole in the back yard.

rf80412 erk Tue, 10/10/2017 - 18:02 Permalink

Because oil revenues are down, the government can't afford (politically or economically) to raise taxes, it can't afford to cut welfare spending when the economy has already imploded and millions are out of work, it definitely can't afford to cut salaries for government workers (i.e. the military), so other than a fire sale of state assets - which is a one-time thing and in the long run makes it harder, not easier, for a government to make money and pay its bills - the only thing the government can do to make money is literally make money.If only people could be convinced that deflation actually delivers what inflation only promises.

In reply to by erk

Albertarocks Tue, 10/10/2017 - 17:46 Permalink

A lovely country full of lovely people, with natural resources up the wazoo... totally destroyed by bankers and government.  Venezuela is absolutely brimming over with potential and I wouldn't hesitate to live there.  Just not right now.  So I take that back... I hesitate for now.  That country will become a gem once the global financial calamity has run its course and the world gets a chance to start over (without bankers next time).  Venezuela is far from finished.

Johnny Debt Tue, 10/10/2017 - 17:52 Permalink I the only one that sees a massively incredible investment opportunity..... cheap currency... cheap properties.... uhh hello... Holy crap most of u guys r dumbasses... you don't see it

redmudhooch Tue, 10/10/2017 - 18:10 Permalink

Starving Venezualans should send complaints to: Donald Trump, Gary Cohn, Steve Mnuchin1600 Pennsylvania Ave., NW Washington, DC 20500 If no one responds to your complants of starving there, please contact Corporate headquarters at: Lloyd C. BlankfeinGoldman Sachs & Co. LLC 200 West Street, 29th Floor New York, NY 10282  Enjoy your inflation. Fuck da Banksters!MAGA! Leave Venezuala the fuck alone.