Maduro Wins Election & Venezuela’s Inflation Makes A New High: 20,186%

Authored by Steve H. Hanke of the Johns Hopkins University. Follow him on Twitter @Steve_Hanke.

President Nicolas Maduro is here to stay -- at least for a while. After winning a landslide ‘election,’ with over two-thirds of the vote, Maduro will remain in the saddle for another five years, in principle. But, as Venezuelans cast their ballots, Venezuela’s hyperinflation episode made new highs, with the annual inflation rate breaching 20,000% for the first time on election day. Currently (5/22/18) Venezuela’s annual inflation rate is at its highest ever: 20,186% (see chart below).

https://pbs.twimg.com/media/DdztZrCU0AAfX_j.png:large

The most important price in an economy is the exchange rate between the local currency and the world’s reserve currency — the U.S. dollar. As long as there is an active black-market (read: free market) for currency and the data are available, changes in the black-market exchange rate can be reliably transformed into accurate estimates of countrywide inflation rates—if the annual inflation rates exceed 25%. The economic principle of Purchasing Power Parity (PPP) allows for this transformation.

Let’s take a closer look at just how rapidly Venezuela’s prices are rising, and how they stack up against other hyperinflation episodes in Latin America (see the table below). Last month, the monthly inflation rate—yes, the monthly—reached a new high of 234%. At this rate, prices doubled every 17.5 days.

The table below is a condensed version of the Hanke-Krus World Hyperinflation Table for the episodes of hyperinflation in Latin America. Contrary to popular opinion, there have been relatively few hyperinflation episodes in Latin America: only eight, with two of them occurring in Peru.

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Venezuela’s death spiral continues to spin, as hyperinflation slashes the value of the bolivar. We can’t forecast the course or duration of Venezuela’s hyperinflation episode, but unless the government dumps the bolivar and replaces it with the greenback, as the Venezuelan populace has already done, this episode of hyperinflation could easily become much, much worse.

 

 

Comments

besnook Tue, 05/22/2018 - 16:38 Permalink

the reason why maduro won is because the vote was an anti empire vote. the american people can be fooled about what is going on in venezuela but the people of venezuela know who the enemy is.

jin187 besnook Tue, 05/22/2018 - 17:24 Permalink

There isn't anything a foreign power can do to make a country have 20,000% inflation.  Evil imperial outside influences or not, Venezuela has no one but themselves to blame for this lunacy.  We've done dick to them compared to North Korea, and Cuba, and you don't see those guys killing each other in the streets for food.  It's even more atrocious when you consider their population density and resources compared to those countries.

In reply to by besnook

1936ryer jin187 Tue, 05/22/2018 - 20:56 Permalink

Yes, Venezuela is a great case study on why socialism is NOT the answer ----- but when you say Venezuela has no one to blame but itself you show your ignorance.  All South and Central American countries have one country to blame for their problems and that is the USA, who for the last 200 years has been fucking with them.  Maybe if our Corporations and banks followed a rule of law the world would be a better place, but when you have psychio paths like the Bushes and Clintons and the rest of the criminals what do you think will happen.  FYI  -- centralized socialism which is really collectivism is coming to the USA too, just hasn't happened yet.  Buy yourself some bitcoin and get away from centralized power.

In reply to by jin187

Fiat Pirate Tue, 05/22/2018 - 17:28 Permalink

No water and erratic electricity service.  Karl Marx taking the world back to the stone age and counting. Fuck toilet paper just having a bath every week is a luxury. 

tangent Tue, 05/22/2018 - 17:53 Permalink

Bernie Sanders must be thrilled about the socialist utopia in Venezuela. He can brag about it in the primaries. Or maybe he isn't thrilled about the National Socialist Party but he is sure that global socialism will work. You have to unable to escape the wonderful socialist government before it works well.

Davidduke2000 Tue, 05/22/2018 - 19:32 Permalink

when these author losers understand, MADURO won the election, they can whine as much as they want, he won and there is nothing they can do about it.

Pretty soon the venezuelan currency will be the Chinese yuan so the us cannot manipulate.

cheech_wizard Davidduke2000 Wed, 05/23/2018 - 01:10 Permalink

Hmmm, so when it comes time to counterfeit the yuan? Oh wait, coming from the country that counterfeits just about every product on the planet?

https://www.linkedin.com/pulse/i-spent-counterfeit-money-china-youll-ne…

Get off your intellectually lazy arse and google it.

Now, when it comes time to counterfeit the yuan to manipulate the currency, you can bet the U.S. will be printing yuan in overdrive. Besides, we already have a lot of practice with CTRL-P.

 

In reply to by Davidduke2000