Inflation, What is it and How to Hide?
“A false balance is abomination to the LORD:
But a just weight is his delight”
Proverbs 11:1
What we once considered the “Jewel in the Socialist Crown”, Venezuela did not bask long in prosperity. After Hugo Chavez took over the nation in 1999, he quickly established his view of a Socialist Utopia on the back of an oil rich nation. With a new constitution, a new national Coat of Arms, a new oil deal and a new social welfare program, Hugo Chavez was lauded by such “intellectual” luminaries as actors Sean Penn, Danny Glover and super model Naomi Campbell and soccer player Diego Maradonna (please pardon the sarcasm). Added to this were men who should have known better; well known Economist Joseph Stiglitz and Philosopher/ Historian Noam Chomsky to name two.
But the illusion of wealth came crashing down after the end of the 2008 Global Financial Crisis, as it does when all debt laden dessert oasis are seen for what they truly are. Nevertheless; lies are to be retained for as long as possible and at all costs according to Joseph Goebbels of Third Reich fame, and so Chavez naturally implemented quickly a gag on the media and price controls. In 2013 the wizard died and the Land of Oz would soon descend into a land of poverty and chaos, being hit with the ‘smiley fist’ of Nicolas Maduro.
Imagine finally getting some money from your father to go to the Music shop and get your favorite CD youd been waiting for, only to get there and find out it had gone up 50% in price, then returning home to tell your dad you didn’t have enough. You got the extra 50% and returned a few days later, but it had gone up another 25%, and again you return home, only to return back that same after noon with the additional money to see yet another price adjustment. This occurred to my brother in law when he lived in hyperinflationary Argentina during the late 80’s.
Imagine a monthly inflation rate of 313,000,000 %
Imagine living in Yugoslavia during the early 90’s with a peak monthly inflation rate of 313,000,000 % per month, no I did not add extra zeros by mistake, that’s 313 million percent per month[1]. In October 1993 the government thought to fix the problem by creating new money to replace the old, one new Dinar was worth one million old Dinars, but by November 1993 the German Deutsche Mark was the only accepted currency by the people, the exchange rate was 1 DM = 1 million new Dinars. Thirteen days later 1 DM = 6.5 million new Dinars, by the end of that month it cost 37 million dinars to purchase 1DM, but it did not stop.
By December 29th the exchange rate was 1 DM for 950 Billion Dinars and two days later it would cost 3 Trillion Dinars to purchase just 1 DM. Then the government announced another new currency, a NEW “new” Dinar equal to 1 Billion of the old “new” Dinars, and the spiral just continued[2]. So, how do you live?
In all cases of hyperinflation, supermarket shelves become quickly empty, people spend or exchange money as quickly as possible to something of value, riots become common place and the search for food is a daily exercise. In 2017, starving Venezuelans broke into a zoo and stole animals to eat[3], child malnutrition reached record proportions with mortality rates jumping 30% higher than the previous year, medical provisions suffered catastrophic shortages[4] and war-like violent crime dominated the capital city of Caracas where the key to survival changed the rule of law to “might makes right”[5]. Yet, Venezuela’s yearly inflation rate at the time was only a ‘respectable’ 700%[6].
“How did you go bankrupt?” Bill Asked.
“Two ways,” Mike said. “Gradually, then suddenly.”
The Sun Also Rises. Ernest Hemingway.
How To Hide
My first observation about inflation survival is that strong family groups best navigated the havoc of hyperinflation in Argentina
Hyperinflation does not begin in Hyper mode, it is gradual until it is sudden. The signs of things changing is typically identified with Governments spending well beyond their means. When Governments seems to be paying for infrastructure or goods or instituting huge spending programs seemingly without any response to a limited budget and fiscal responsibility, you know the time of general inflation is set to change, we are seeing this occur dramatically in Australia at present and in the world at large.
So how do you hide? The most evident realisation is that life has changed; prosperity is no longer the goal, survival is. This alone can be hard to deal with emotionally, but the sooner we take stock of the reality, the sooner we can prepare for what may be a long term problem, as these events are rarely a flash-in-the-pan and can last several years. The worst thing you can do is attempt to extend a lifestyle that ends in bankruptcy, accepting the reality of the situation early is vital to survive.
Experiencing the economic catastrophe of Argentina in the 80’s, retired minister Richard Dean Young wrote “ My first observation about inflation survival is that strong family groups best navigated the havoc of hyperinflation in Argentina. Those who truly love you and are interested in your welfare are much better at making sure you don’t starve than any government…The best hedge is a close circle of friends and family determined to help.”[7]
By far, the single greatest asset we have as a Church, is the love we share in Christ and toward one another, from this strong position, we can both survive and work toward blessing others. We pool resources, plan and first aim to assist one another mentally encouraging each other daily, then we work toward the practical.
To be continued….
Pr Edi Giudetti
[1] https://en.wikipedia.org/wiki/Hyperinflation_in_the_Federal_Republic_of_Yugoslavia
[2] http://www.rogershermansociety.org/yugoslavia.htm
[3] https://www.dailymail.co.uk/news/article-4797338/Police-believe-thieves-steal-Venezuela-zoo-animals-eat-them.html
[4] https://www.pbs.org/newshour/show/venezuela-hospitals-face-crisis-meds-run-low
[5] https://www.latimes.com/world/mexico-americas/la-fg-venezuela-violence-20160605-snap-story.html
[6] https://www.bbc.com/news/av/world-latin-america-40130224
[7] https://thefederalist.com/2021/06/16/heres-what-i-learned-from-living-through-massive-inflation-in-argentina-and-the-1970s-united-states/
0 Comments