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Hugo Chavez's Inflation cure = cut off 3 zeros


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#1 Rogerdodger

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Posted 16 February 2007 - 11:18 PM

Chavez Anti-Inflation Plan May Backfire, Analysts Say (Update2)
By Guillermo Parra-Bernal and Alex Kennedy

Feb. 16 (Bloomberg) -- Venezuela President Hugo Chavez's plan to curb inflation by lopping three zeros from the currency may backfire because the move fails to address production bottlenecks that are pushing prices higher, economists said.

The government will cut three zeros from the bolivar's exchange rate by February 2008, Chavez said last night in a televised speech, citing rising consumer prices. He also will cut the value-added tax rate and clamp down on ``speculators'' to halt last month's 4 percent increase in the cost of food.

The steps aimed at slowing inflation and boosting local output miss the root causes exacerbating imbalances in South America's third-biggest economy, according to economists at Goldman Sachs Group Inc. and Bear Stearns & Co. Flush with oil money and government spending, which jumped about 50 percent last year, economic growth and inflation are both surging.

``He has a funny understanding of the problem,'' Alberto Bernal, a Latin America economist with Bear Stearns & Co., said in an interview. ``Cutting a number of zeros from the bolivar is irrelevant in the end.''

Chavez, who won a third term in December, was granted decree powers last month by Congress in his drive to seize key industries and put the country on the path of socialism. The president said he plans in ``coming hours'' to decree a law that allows the government to expropriate any business that sells food products higher than government-set prices.

The annual inflation rate rose to 18.4 percent last month, the highest in Latin America, from 10.4 percent in May.


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#2 fib_1618

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Posted 17 February 2007 - 09:29 AM

The president said he plans in "coming hours'' to decree a law that allows the government to expropriate any business that sells food products higher than government-set prices.

In case anyone is interested, this is called Communism and not Socialism.

And yes, this Marxist policy will fail to do "what was intended" as it has so many times before - and the people, not the dictator, will sadly suffer.

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#3 OEXCHAOS

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Posted 17 February 2007 - 10:55 AM

Indeed, Fib. Communism is evil at its core. Any intelligent (and modestly educated person) person who honestly advocates such is morally and philosophically bankrupt, if not evil. Of course, given the well known history of communism, one might make a charitable argument that Hugo is just dumber than a box of rocks and not evil or power mad. Mark

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#4 Rogerdodger

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Posted 17 February 2007 - 11:01 AM

Hugo is just dumber than a box of rocks and not evil or power mad.

The US seems to be slipping into the same pit.
I think of the eminent domain issue with private property being given to developers merely for the potential of increasing the tax base for local government.
Then there is the Presidential candidate who recently said "I want to take those profits..."

Hopefully there is a pendulum effect which will keep us centered over time...I hope.

Edited by Rogerdodger, 17 February 2007 - 11:04 AM.


#5 colours

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Posted 17 February 2007 - 11:05 AM

I have taken a different view of Socialism . I view Communism as the extreme left wing of Socialism . Nazis ( National Socialists Party ) are the extreme right wing of the Socialists . All of them are Socialist and are juxtaposed to Capitalism which is the social order of this country. The Socialists , following their 19th century philosophies , are doomed to failure over the long term . Their economic model is flawed and unsustainable. It is sad to see a country as wonderful as Venezuela go down this path with the knowledge that all who have gone this path before have failed.

#6 Sentient Being

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Posted 17 February 2007 - 01:03 PM

So let me get this straight because it confuses me. If today, I can exchange one dollar for 3,000 pesos....and tomorrow Chavez says he will only give me 3 pesos for a dollar. What does that do for his currency? Tomorrow no one will accept 3 pesos for anyhting unless he adds back the zeros to the exchange rate. By the way, don't know what they call their currency...doesn't matter. Might this not actually do more damage and collapse their currency abroad, creating a situation in which their money is no good, no one will buy it at the going rate? Might that not help to destroy their trade and ruin their ability to buy things abroad they need? They may have to convert to the dollar and have N. Korea print them up a batch of them! :P It was a sad day when people started cheering and supporting this clown, he's going to cause a lot of suffering and destroy a lot of lives before they realize that he was a fool not a hero. I suppose after he collapses their economy and the revolution to run him out is over....it will be a great place to retire. You will be able to live off of US social Security down there like a king!
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#7 fib_1618

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Posted 17 February 2007 - 02:16 PM

Nazis ( National Socialists Party ) are the extreme right wing of the Socialists

You maybe confusing the terms "Nationalism", "Universalism", and that of "Fascism".

"Nationalism" is when a collective group of people decree that all of its peoples live under one ideological social belief of being separate from all others and that all other cultures (and languages) are sub dominate to their way of life.

"Universalism" believes that these same cultures (and languages) should be the dominate doctrine of all others around them. This can range from left wing socialism to right wing (religious) conservatism.

"Fascism" is the enforcement of these same cultural differences on others who choose not to assimilate to such practices.

It was a sad day when people started cheering and supporting this clown, he's going to cause a lot of suffering and destroy a lot of lives before they realize that he was a fool not a hero.

This is where education can make the difference between tyranny and freedom, and even then, humans are such gullible creatures that even those who are educated can be easily swayed if they're told long enough that they are wrong in their thinking and character.

Fib

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Demagogue: A leader who makes use of popular prejudices, false claims and promises in order to gain power.

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#8 SemiBizz

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Posted 17 February 2007 - 02:21 PM

My we are straying far from the intended purpose of this site. I smell politics all over this site today...
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#9 Rogerdodger

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Posted 17 February 2007 - 02:24 PM

Semi, you are right. It is often nearly impossible to post some news items without getting close to the line..or crossing over it. So let me :zipped: Thanks Roger

Edited by Rogerdodger, 17 February 2007 - 02:26 PM.