My sister in law is from Venezuela.
She’s a lovely person, puts up with my brother and keeps her 5 kids in line, for the most part.
She still has family there.
Unfortunately, they are suffering terribly. Resources are extremely hard to come by.
Last year for Christmas, instead of giving gifts to each other, we sent boxes of food, toilet paper and other supplies to her family.
And this was before things got really bad.
Venezuela has been in the news recently for the nearly complete collapse of their economy.
Bare shelves, violence and long lines to get food are now the norm.
Many say their incompetent, corrupt socialist government is to blame for running their oil industry into the ground. But it’s worse than that.
Their currency has become borderline worthless. (Inflation will reach 720% this year. And it’s scheduled for over 1000% hyperinflation next year.)
It’s become so bad their government had to fly in 36 cargo planes full of printed money.
It brings back images of Germany pre-World War 2 with people carrying money in wheelbarrows to go to the store or burning it because it was worth more as firewood than buying food.
In a show of undying stupidity Luis Salas, a left-wing socialist political figure appointed to ‘fix the economy,’ blamed the countries problems on an economic war (whatever that is)…not on money printing.
He rejects the basic tenets of conventional economics, like printing too much money causes inflation.
Apparently Luis never made CoolAid as a kid…because if he had, he most certainly would know how inflation works.
Put in just the right amount of water and you have the drink of childhood champions. But what happens if young Johnny goes overboard? He wants a little more CoolAid without doing the hard work of making another batch.
He’s a greedy little bugger, so he dumps in more water.
Now, instead of a totally unhealthy, yet delicious sugary drink, you end up with something tasting more like toilet water than CoolAid.
That’s inflation. The value (potency) of money is decreased when you put more into the system.
Unfortunately, the political and financial elite ruling class here in America are no smarter than the socialists running the Venezuelan horror show.
During the past 8 years the printing press has been running full steam. For several years they were pumping out as much as 86 billion dollars per month in printed money.
At the time other country economies were running strong (China, Japan, Brazil, Saudi Arabia) and they bought up a lot of it, so it didn’t make it into our batch of economic CoolAid yet…
The question is simply ‘When will it hit the fan?’
Well, unfortunately time may be running out. It may be sooner than later.
China, Russia and Brazil each dumped at least $1 billion in Treasury bonds in March…
In all, central banks sold a net $17 billion and selloffs hit a record of $57 billion in January.
So far this year the dump has eclipsed $127 billion…the largest selloff since 1978.
Combine that with China and other foreign governments goal to get rid of the dollar as the reserve currency in the world, and we’ve got a storm brewing.
What does this all mean for us little people in the game they are playing?
Well, if you are a bible believer, you know Noah built the Arc before it started raining, while everyone else laughed and partied like 1999…
When the rain started, it wasn’t so funny. (For those who don’t know the story, the partiers all drowned.)
And that’s the best we can do.
Build our financial Arc.
Save some more money. Store some extra food. Think twice about having all your assets subject to a collapse in the stock market. Earn some extra money with some moonlighting
I don’t imagine it was a great time riding on the Arc with a bunch of stinky circus animals, but the alternative was slightly worse.
P.S. We want to know what you are doing to build your financial Arc…just reply to this email.