What really happen to Venezuela money and inflation?

[u/Dover299]

People say Venezuela became socialist. That killed their free market prosperity is that true? As a result of a collapsing economy in the face of hard socialism, they went deep into debt and tried price controls, along with trying to print their way out of it. Printing money devalues it and you get the classic "too much money chasing too few goods". Eventually, people lost all faith in the currency.

Is that really what happen to Venezuela money or was there other factors that lead to massive inflation?

[u/OkBet2532]

Went from one long standing leader to a new system causing political instability. Venezuela basically only sells oil, the price of which it cannot control well. Finally many governments are sanctioning Venezuela in an attempt to back the old money in the country.

[u/myaltduh → u/OkBet2532]

The biggest single reason for their collapse was the total reliance on oil exports. Hugo Chávez funded all of his generous social programs with oil revenue, riding out the huge spike in oil prices that peaked in 2008. When the recession crashed global oil markets, Venezuela got fucked particularly hard, and the government began inflating the currency to try to continue to fund its programs. This failed to prevent widespread impoverishment, which led to social unrest, which led to government crackdowns on political opposition, which helped motivate Western powers already hostile to the Bolivarian regime to toughen sanctions, which caused more poverty and unrest, which just repeated the above cycle.

They’ve never been able to climb out of that death spiral, and it doesn’t help that the US seems determined to keep them in it until they liberalize their economic system, though at this point the rank incompetence of the Maduro government bears a lot of the blame as well.

It’s also probably worth pointing out that Western exploitation encouraged that initial reliance on the economic house of cards that was funding an entire social democracy on exports of their dirty and uneconomical tar sands oil.

[u/Intelligent-Sign-366]

Depends on what you believe in terms of monetary policy. I would say they endured an intentional assault on their economy from abroad with the Trump admin spiking oil exports, various banks around the world confiscating assets. Meanwhile their domestic spending on(good) social programs was reliant on oil income. Without that income they were forced to either print money to fund those programs, or borrow. Some people think, wrongly in the case of most nations, that any nation that controls the money supply can infinitely print money as long as it is taxed back out of an economy without ill effect. . . fiat currency being what it is I find this view short sighted. The US can do that because the dollar is, for the moment, in high demand abroad. Venezuela not so much. Anyone feel free to correct me, or fill in facts, this is what I vaguely recall happening from doing research at the time. . . it has been years. XD

[u/Supercollider9001]

A couple of good reads:

https://nacla.org/is-hugo-chavez-to-blame-for-venezuelas-collapse

https://nacla.org/news/2017/04/28/explaining-venezuelan-crisis

(NACLA is a good source for other Venezuela articles)

The inflationary crisis partly is caused by the oil price fluctuations and Chavez’s lack of investment in diversification of the economy and domestic production. Another factor is monetary policy which devalued the currency to boost exports (something a lot of countries do to acquire foreign currencies to make debt payments). They also had some disastrous monetary decisions in the wake of the 2014 crisis which made it worse. And the rest can be blamed on corruption.

All of this of course is in the context of sanctions and pressure by the US to for regime change. We know Venezuelan elites were creating artificial shortages to force Maduro out.

https://www.reuters.com/article/world/venezuela-takes-over-supermarket-chain-accused-of-hoarding-idUSKBN0L71W1/

[u/ElEsDi_25]

In very broad strokes: Bolivarian socialism was a kind of left-wing populism which has a tradition in Latin America. Chavez could try to use inflated petrol prices to fund social programs to stabilize society and build up the national economy outside the neoliberal imf schemes of the 1990s.

He could be popular with the people and counter the economic power of the rich because of massive social spending. But when fuel prices crashed, the economy did as well and now there are austerity measures which have eroded the popularity of the government.

[u/WebBorn2622]

The rich people essentially declared war on the government and started teaming up with the US to cause as much damage as possible to lay down the context for overthrowing the democratically elected government.

First they artificially increased the prizes on the necessities that they were selling, to forcefully starve the population. They hoarded food in storage units, and shot up the prices so no one could pay for it.

Then they started withdrawing money from the banks and illegally smuggling out money with US help. Leaving the country way less physical money and no choice but to print more.

Then the US offered to send “aid”, which would have most likely been a front for sending in weapons as the US has done that before in other socialist countries it wanted to destabilize. Which the government rightfully refused.

Then the US called it a dictatorship and staged a coup. Seriously; watch the revolution will not be televised. The shit they did was crazy.

[u/nzs443]

To put it simply, Chavez was really stupid...

One of the early factors that contributed to the economic crisis was Chavez's response to striking oil workers in 2002. In retaliation, Chavez fired ~18,000 workers. That loss of expertise had significant impacts on the production of oil for years to come.

Then, of course, there's the typical boom and bust of monoeconomies. With the 2008 economic crisis, oil prices collapsed, which hit Venezuela pretty hard and resulted in the government being unable to fund their social programs. In response, they foolishly figured printing more money would fix the problem.

Since then, their economy has been unable to bounce back. Sanctions on the country play a complicated role, with many being targeted against individuals. However, some impact the country's sources of revenue, like the oil industry, and others inadvertently make it more complicated for Venezuelan citizens and small businesses to participate in the global economy.

All in all, I'd say the bulk of the blame lies with the incompetence of Chavez, Maduro, their cronies, and a smaller share on the sanctions. I'm not really a socialist, but I can't really blame socialism as a whole for what occurred. Economic incompetence and authoritarianism aren't unique to socialist leaders, and there's been plenty through history who were purely democratic and could have handled the economy better. But it's a complicated subject and a sore spot for many who were personally affected by Chavez.

[u/Damn_Vegetables]

Petrostate that was doing well till oil prices dropped, then Chavez and Maduro completely botched the decline and shot anybody who complained or had good ideas for how to improve anything

[u/Prestigious_Boot3155]

First, Venezuela's prosperity pre-Chavez is a myth, at least to the common folk of the time

Second, what caused their downfall is similar to that of Weimar Germany and Zimbabwe under Mugabe

Debt owed in foreign currency, reduced production output, continued deficit spending, insufficient adjustment of taxes

This reduced production output, I emphasize, being due to oil price decreases and the U.S deciding to freeze their assets in America, such as Petrocaribes, and sanctioning them, of course (if they had more production, they'd not have much trouble with printing more money)

Getting into debt and price controls are a response to that

This is what came first, to cause the destruction of their "hard socialism" economy, which was essentially similar to Denmark, but Global South and anti-western comprador interests (aka: it wants to

Third, Venezuela, despite this, had some progress.

Not sure if I can produce a full report but here are a some graphs that may help(all of it is in Spanish). Sadly, most of the information is dispersed in a ton of places:

Inflation metrics:

> national consumer price index accumulated inflation until the month of May Period: 2012 to 2024

Source for 1st claim -> https://www.telesurtv.net/venezuela-registra-la-tasa-de-inflacion-mas-baja-desde-2004/

Economic growth compared with other regional countries:

> Venezuela 2024: leading regional growth

> America Latina: GDP growth rate projection, 2024

> economy growing for 11 consecutive quarters

> preliminary results for the first quarter of 2024 exceed 7% growth

Food production in all sectors. (includes imports and local prod)

> towards food sovereignty 

> high levels of national processing of mass consumption items

> national processing-imports relationship, 2024

> tuna, oil, pasta, milk, family wheat flour, sugar, pork, legumes, sausages, mayonnaise, rice, ketchup sauce, canned sardine, corn flour, coffee, eggs, chicken, refined salt, beef , daisy

Source for 2nd and 3rd claim -> https://www.telesurtv.net/venezuela-avances-economicos-significativos-en-medio-de-amenazas-persistentes/ 

For your other question, yes, there is a plan which integrates models similar to China which is the Direct democracy and Popular Consultation -> https://www.telesurtv.net/consulta-popular-y-democracia-directa-la-propuesta-de-nicolas-maduro-para-el-nuevo-ciclo/