ed wrote: ↑
Wed Aug 29, 2018 10:45 am
Could some one answer two questiions for me?
1 How did this happen? I mean not theoretically but practically, mechanically, how did this occur?
2 how is it fixable?
Keep it simple. Avoid bullshit economic jargon.
There is a Wikipedia article about it, if you're interested. Just search for "Crisis in Venezuela".
But I'll attempt to summarize some of the big reasons.
The economy of Venezuela has always been heavily dependent on oil exports. And since Hugo Chavez took over, the country had used its oil money to fund a lot of giveaways to the poor. They also practically give away gasoline, I'm talking less than 10 cents per gallon, less than it costs to produce the stuff. But it's popular with the people of course. Who doesn't want free stuff from the government, right?
In the past,
the government could pay for all of this populist stuff (barely) because they also exported a lot of oil. So with the dollars they received by selling their oil to other countries, they could import enough goods to make up for any shortfalls at home.
Anyway, long story short, they neglected other industries and other sectors of the economy because the oil was their goose that laid golden eggs. Then, the price of oil fell to like half a few years ago, and since then, they haven't been able to sell enough oil to pay for all their stupid policies and corruption.
Add to that terrible economic and monetary policies (price controls, exchange rate fixing, and so on) and you see the results.
A fool thinks himself to be wise, but a wise man knows himself to be a fool.